PRIVATE BUSINESS

Mersey Tunnels Bill (By  Order)

Order for Second Reading read.
	To be read a Second time on Tuesday 9 July at Seven o'clock.

Oral Answers to Questions

INTERNATIONAL DEVELOPMENT

The Secretary of State was asked—

Famine (Southern Africa)

Huw Irranca-Davies: If she will make a statement on international efforts to tackle famine in southern Africa.

Clare Short: The causes of food shortages in southern Africa this year are drought and misgovernment. In Zimbabwe, which accounts for over half of the region's total food requirements, economic mismanagement and grossly mis-organised land reform have seriously exacerbated the effects of the drought.
	The World Food Programme will next week launch a regional appeal for food for Zimbabwe, Zambia, Malawi, Mozambique, Lesotho and Swaziland. The WFP estimates that 4 million tonnes of cereal imports will be needed. Of that, 2.8 million tonnes will need to be provided by the private sector and government imports, and 1.2 million tonnes through food aid, which will be distributed free. Hardly any preparations have been made in Zimbabwe, and I am fearful that we are facing a serious catastrophe.

Huw Irranca-Davies: I thank my right hon. Friend for that full response. It is undoubtedly true that current levels of bilateral aid to Africa, with the pledges, will be treble what they were under the last Tory Government. However, in central Mozambique, there are one in five people with AIDS-related HIV, which is exacerbating the problem. In Zambia, there is the worst drought for 20 years. In Zimbabwe and Angola, Governments interfere in food aid. In Malawi and Zambia, people are scouring the bare maize fields for weeds to eat. There are corruption, political problems, HIV and famine.
	My right hon. Friend the Prime Minister said—

Mr. Speaker: Order. Please be seated. Perhaps the Minister will try to reply to that question.

Clare Short: Yes, Africa is the poorest continent. Nearly half its people are abjectly poor. On current trends, the continent will become poorer. However, we have progress in a number of countries—for example, Uganda, Mozambique, Ghana and Botswana, and Ethiopia is turning round. We must take the plight of Africa seriously and we must ensure that there is a move forward to peace and development.

Martin Smyth: We recognise that some of the problems are self-inflicted, as in Zimbabwe. However, will the Secretary of State tell us how Malawi was guided by the World Bank to release about £750,000 worth of wheat stock, which would now have been helpful to it?

Clare Short: That is an untrue excuse that has been given by the Government of Malawi. The country had large food stocks, but they must always be rotated to keep them fresh. Malawi borrowed money at great expense to have its food stocks. The IMF suggested that it could slim them down and rotate them. Malawi sold the lot. It is not clear where the money or the food went. That has exacerbated the crisis. That is the responsibility of the Government of Malawi. They are co-operating with the international community, and I hope that we can help the people of Malawi through. The situation in Zimbabwe, where nearly half of the people are in trouble, is much more worrying.

Barbara Follett: Have the South African Government been involved in providing food aid in the region?

Clare Short: I am not aware whether the South African Government have provided food aid. Much of the food has to come through South Africa and South African transport routes. We are talking not only about quantities but about getting the food in to the places where it is needed. It is a major logistical task and South Africa has been very involved. I think that we will also need to bring in food also through the ports on the coast of Mozambique if we are to get in enough food.

Jenny Tonge: While the famine in southern Africa has been developing and numerous aid agencies have been warning of an impending crisis, there have been 13 world summits. I will not read out the list, Mr. Speaker, because it would make you cross. What does the Secretary of State estimate to be the cost of all this talking? With far less than a dollar a day, how many people could have been saved with the money expended?

Clare Short: I agree with the hon. Lady's underlying point. There are too many conferences on international development. There are too many grand declarations and too little implementation. We have been trying to get a grip on not having endless repeat UN conferences where we renegotiate the text that was agreed last time, and instead report on progress against what was agreed last time. The recent run of summits from the millennium assembly tying the world to the millennium development goals, to Doha, to the commitment to a development round, to Monterrey to a reformed agenda and more money, and I hope, to Johannesburg, to get a commitment to sustainable development and poverty reduction, constitutes a good round. We should then implement and have fewer conferences.

Helen Jackson: At a recent conference in madrid attended by African and European parliamentarians and organised by the Association of European Parliamentarians for Africa, there was concern among the African parliamentarians that the emphasis on the New Partnership for Africa's Development initiative needed to have more links with the emphasis on relieving poverty and debt in southern Africa, and therefore relieving famine. Will my hon. Friend comment on how famine and poverty relief will be worked into the NEPAD initiative that is being discussed at the G8 summit?

Clare Short: The whole point of NEPAD and all its targets is to move Africa forward to meet the millennium development goals. It is all about reducing poverty sustainably. That is the purpose of NEPAD. My hon. Friend's comments reflect the fact that there has been too little work across Africa to let the people of Africa know what NEPAD is about. We, through the Global Coalition for Africa, will engage in such an exercise.

Caroline Spelman: In our debate on Zimbabwe last night, the Secretary of State said that
	"we cannot feed those who will be hungry unless the Mugabe regime permits the private sector to import food."—[Official Report, 25 June 2002; Vol. 387, c. 844.]
	What additional pressure is being brought to bear on Robert Mugabe to enable food imports to stave off famine?

Clare Short: As the hon. Lady knows, it is very difficult to bring sensible pressure to bear on President Mugabe. He does not take advice, it seems, from anyone. The Government of Zimbabwe are not yet making credible plans to deal with the impending disaster. In order for the private sector to operate, price controls need to be removed, the exchange rate needs to be adjusted, and the state grain monopoly must be abolished. Otherwise, the private sector will not be able to operate. There will be lots of people with money and there will be no food to buy. We must get food aid through to the people with no money. Kofi Annan and the leader of the World Food Programme are trying to exert pressure, but the situation remains extremely worrying.

Derek Wyatt: With regard to Malawi, is my right hon. Friend saying that the President of Malawi sold the food to Kenya and that the money is missing? In that case, what electronic information can the International Monetary Fund give us about where the money has gone?

Clare Short: No, I am not saying that the food has been sold to Kenya. We do not know where the food is. There is about to be a crisis, and people sometimes hoard and speculate with food when countries are facing famine, as my hon. Friend probably knows. We do not know where the money is or where the food is, and we know that there is an impending crisis in Malawi but the Government are co-operating. There is an inquiry into these matters, but we must get people fed while we make inquiries about what happened.

Caroline Spelman: Last night the Secretary of State also said that the only way she could see the Mugabe regime being brought down was as an inexorable consequence of the famine. How does that square with the Prime Minister's rhetoric about healing the scars of Africa and declaring no tolerance of the activities of Mr. Mugabe? Were those just empty words?

Clare Short: The hon. Lady and her party were banging on about that last night in a most foolish way, and I am sorry that she has returned to the matter today. The presumption is that the UK Government can fix catastrophes in the world, when Governments are determined, against all international advice, to wreck their country. No UK Government can do that. The present UK Government have done everything in their power to try to dissuade the Zimbabwe regime from the course that it is taking. Even in the face of impending famine conditions, the regime goes on making errors that will make matters worse.

Third World Debt

Andrew Selous: If she will make a statement on the repayment of third world debt.

Clare Short: Twenty-six of the 37 eligible heavily indebted poor countries have now qualified for debt relief of $62 billion. That has been provided through the poverty reduction strategy process, which has led to improvements in economic management and improved spending of local revenues and aid money.
	Of the remaining 11 countries, many are mired in conflict and misgovernment. We are working to try to achieve progress on peace. We estimate that because of the fall in commodity prices, we will need an extra $1 billion by 2003 to get the countries that qualify to debt sustainability levels.

Andrew Selous: Do the Government agree with the Jubilee debt campaign that the number of countries that benefit from the HIPC initiative should be extended to include further countries that have unsustainable levels of overseas debt?

Clare Short: No, I do not agree with the Jubilee debt campaign. For example, it is proposed that Nigeria should benefit. Nigeria is massively oil-rich, and oil prices have gone up. It is terribly misgoverned and its resources are not used for the benefit of its people. To write off debt unconditionally would not bring any benefits to poor people. We are using the leverage of debt relief to write off unpayable debt and get good economic policy and better social spending. That is the right way. Countries such as Sudan, Burma, Somalia and Liberia could qualify if we could get them to peace. It is no good giving them debt relief while they are still buying arms and fighting, so I disagree. We must drive those countries forward, achieve peace and reform, and reward that with debt relief so that the countries get better economic management and the life of the people improves.

David Taylor: Further to the previous question, there are nevertheless several dozen countries that lie just outside the HIPC—heavily indebted poor country—criteria. Can the Secretary of State tell us what our Government are doing to help those countries to move forward to a sustainable debt framework not unlike the HIPC one?

Clare Short: The other thing that hon. Members must understand is that, because there has been such a wonderful campaign on debt, people sometimes talk as if it were the only problem. Many very poor countries do not have a debt problem, but need continuing support. For example, in Uganda, which has qualified for debt relief, 50 per cent. of the Government's revenues are supported by aid, and the country has made enormous progress in reducing poverty and getting all its children to school. We are helping country after country in the appropriate way and not pretending that the only problem is debt. Some countries are poor but do not have debt, and they need help as well.

Stephen O'Brien: The Secretary of State will be aware that the debt of many heavily indebted countries is not only sovereign-to-sovereign debt, but involves private finance in the banking system. She will also be aware that back in the 1970s and 1980s, when most of the debt was extended, many of the banks knew that they were very unlikely ever to be repaid and are quite happy to continue to exercise their leverage. Given that they have now written off the amounts in their own balance sheets, should it not be possible to persuade them, in exchange for having direct access through NGOs rather than Governments, that that debt should now be relieved?

Clare Short: My understanding is that those countries have limited commercial debt and that as they are such poor countries, they did not get much commercial lending. However, some commercial debt that should be part of the HIPC process is not properly being written off, and we need to attend to that issue. In general, commercial debt is written down through the London Club. If the hon. Gentleman would like to explain his points more fully, perhaps in a letter, I shall look into the matter and respond to him.

Angola

Vernon Coaker: What assessment she has made of the humanitarian situation in Angola.

Clare Short: The humanitarian situation in Angola remains very serious. More than 80,000 former fighters, 160,000 family members and 4 million displaced Angolans are all facing a humanitarian crisis. The United Nations has launched an appeal for $141 million to provide support until the end of 2002. We are contributing directly and trying to improve the effectiveness of the international response to the crisis, but Angola is at peace for the first time since the 1960s and this is a fantastically important opportunity to help it to move forward.

Vernon Coaker: My right hon. Friend deserves a lot of praise for the way in which she has highlighted the plight of the poor in Africa. Is it not also the case, however, that some countries in Africa do not get as much publicity as others? On a visit to Angola with UNICEF a few months ago, it was clear that Angola was almost a forgotten country. According to UNICEF figures, Angola is the worst place in the world in which to be born. Will she do all that she can to ensure that Angola is mentioned in all the international discussions that take place and features in any anti-poverty drive?

Clare Short: Yes, I will give that undertaking. As my hon. Friend knows, the biggest chance that Africa has is that Angola, the Congo and Sudan are all ripe for peace. If we can capture peace in those three massive resource-rich countries, the prospects of the continent will be lifted. Angola has enormous and rich resources, but they are not well used for the benefit of the people. If we can get peace and development there, they will act as an engine for development in Africa.

Tony Baldry: It is incredibly good news that Angola is at last at peace. It is also good news that Africa as a whole wants to take forward partnership through the NEPAD agreement. Great hope was held out at the G8 meeting, but there is a danger that the initiative may be distracted by other issues. Does the Secretary of State feel that, if it is distracted, it may be sensible to try to hold a summit that is devoted to African issues? I suspect that if the G8 does not make the progress on Africa for which many people hope, there will be considerable disappointment.

Clare Short: The priority that is being given to Africa at the summit is remarkable, and it is down to the efforts of our Prime Minister. A third of the summit's time has been allocated to Africa, which is unprecedented; the G8 countries do not usually discuss development, let alone the poorest continent. The hon. Gentleman is right: Africa cannot be fixed in one summit. NEPAD is a long-term development relationship that we all have to commit to and drive forward through all the channels of the international system. I am sure that the hon. Gentleman will try through his Select Committee to ensure that that is done as well as possible.

Tom Clarke: The overwhelming recollection of many of us who went to Angola during those terrible years when the war was taking place is the dreadful devastation arising from land mines. Will my right hon. Friend assure us, as I believe that she would want to, that the Government will do as much as they can to remove the legacy of those land mines?

Clare Short: Yes. Four million people are displaced in Angola as a result of the war. Getting them home, getting them farming and getting their lives moving again is crucial, and land mines have to be removed to allow that to take place. When I was recently in Luanda, members of UNITA, the rebels who were defeated in the war, said that there are fewer land mines than has been suggested to the international community. So there is a problem, but it is probably resolvable. I agree with my hon. Friend that it is an important priority to get people back on to their land.

Nick Hawkins: Although, as the Secretary of State said, the peace in Angola is very welcome, I am sure that she agrees that Angola has suffered greatly from drought and starvation, as well as from wars and bad governance. Aid to the people of Angola is being delayed as a result of protracted negotiations between the United Nations and the Angolan Government, who failed to provide the security guarantees that the UN required. What steps do the Secretary of State and Her Majesty's Government propose to try to end that stalemate and to ensure that the aid reaches the people who desperately need it?

Clare Short: The first point that I would make to the hon. Gentleman is that natural disasters rarely become catastrophes without misgovernment. Countries can cope when they have a decent Government, but the combination of natural disasters and misgovernment leads to catastrophe and famine. Unfortunately, Angola has suffered from war and misgovernment, but it now has a great opportunity.
	As regards the UN, the problems are completely resolved. We have been attending to that. The UN Office for the Co-ordination of Humanitarian Affairs is about to make its appeal. We are getting food through to families and to fighters—otherwise there is a danger that they will roam about with weapons, and the country will be full of disorder. We are following the situation closely. I believe that all the problems with the UN system have been resolved, but, given what the hon. Gentleman says, I shall look at the matter again to make sure that that is correct.

Afghanistan

Andrew George: What recent assessment she has made of the international effort to provide humanitarian relief to Afghanistan.

Sally Keeble: About half the Afghan population—about 9 million people—rely on food aid, but a complete humanitarian catastrophe has been avoided through the efforts of the international community, which has provided more than £1 billion in humanitarian aid to the country since October last year. We now need to refocus our efforts so that we not only provide people with food, but ensure, in conjunction with the transitional Administration, that livelihoods and public services are restored and that the security sector is reformed.

Andrew George: I am grateful to the Minister for that reply. The leadership of her Department in this regard is widely acknowledged, but does she not share my concern that last month the United Nations High Commissioner for Refugees had to cut by two thirds food aid to returning refugees? There are worries that food rations might need to be stopped altogether in certain areas. What action will her Department take in the international sphere to ensure that assistance is increased and peace is effectively secured?

Sally Keeble: We are pressing others to provide the aid that was promised to the country. We are also considering other factors, including what happens in the regions and security sector reforms, to ensure that food aid can get out—not only into Kabul, but throughout the countryside.

Linda Gilroy: Will my hon. Friend give the Department's assessment of the capacity of women to help to deliver that humanitarian aid effectively?

Sally Keeble: It is extremely important to ensure that women can play a proper role in the reconstruction of the country. The transitional Administration have made the education of women a priority, and women have acted independently in the Loya Jirga. We will monitor the situation closely to ensure that the commitment to appoint a women's Minister is carried out.

Andrew Robathan: What assessment has the Minister made of the ability to get all land back into productive use for agriculture next season, if not this season? What effect will that have on the need for humanitarian food aid?

Sally Keeble: The ability to get land back into productive use is important because approximately 85 per cent. of the population live in rural areas and rely on it for their food. There are perhaps two key factors: the administrative reforms that I mentioned, and ensuring that we encourage farmers to produce different crops instead of cultivating poppies. My Department is taking a lead on that.

Tam Dalyell: Can it possibly be true that specific Afghan cultivators have easily acquired land mines to protect their poppy crops?

Sally Keeble: I was not aware of that. The Government have provided some £3 million of support for removing land mines. I shall make inquiries and keep my hon. Friend informed.

Interdepartmental Discussions

Norman Baker: What mechanisms exist for discussions with the Foreign and Commonwealth Office, Ministry of Defence and Department of Trade and Industry collectively to resolve questions of common interest.

Clare Short: We have close dealings with other Departments at official and ministerial level on debt, International Monetary Fund and World Bank policy, conflict, trade policy, international environment agreements, agricultural and fisheries policy, money laundering, corruption and many other subjects.

Norman Baker: The mechanism for arms sales and the clearance of arms exports—the F680 procedure—is not working properly. I understand that the Department was not consulted or even informed about BAE's application for the Tanzanian air traffic control system. Should not the Department be involved much earlier? It is unsatisfactory if the Ministry of Defence gives clearance at an initial stage and that is the end of the matter.

Clare Short: I agree that it is worrying that there is a procedure for saying that it is a good idea to go ahead with a project when other Departments have not been informed. That does not commit us to the licence, but it is a strange procedure. We are reviewing the application of the sustainable development criterion. The question needs examining.

Julia Drown: My right hon. Friend is aware of the impact of conflict on developing countries. The availability of small and large weapons plays a part in fuelling that conflict. The UK is one of the largest producers of weapons and therefore has a responsibility. What mechanisms exist whereby my right hon. Friend can engage in conversations with other Departments to ascertain what can be done to diversify away from that dangerous trade into more productive trades? [Interruption.]

Mr. Speaker: Order. I appeal to the House to come to order. The noise is unfair to hon. Members who are interested in this matter.

Clare Short: My hon. Friend is right. However, there are responsible arms sales. For example, South Africa has equipped itself to help resolve conflicts in Africa, and that is desirable. Arms can therefore be sold responsibly, but they can also clearly be sold irresponsibly. When he was Foreign Secretary, my right hon. Friend the Leader of the House negotiated with other EU member states a tightening of standards for licensing applications. That process is beginning to flow through, including a new control on arms sales that might damage sustainable development. The application of that rule is currently being reviewed. We are making progress, and there is room for more.

Nicholas Soames: Given the generally effective way in which the Department has come to work over the years with the Ministry of Defence, to the great advantage of delivering aid to those who most need it, will the right hon. Lady consider developing with her colleagues in the EU a system of best practice whereby Ministries of Defence in other European countries adopt the same method of operating?

Clare Short: We work well together when the Army is in developing countries and can help to stabilise matters, get schools working and re-establish other aspects. It is also important to work together to reform the security sector in badly governed countries so that people have peace, order and stability, which contribute to the development of the economy. We have worked closely with the Ministry of Defence on that. A good example is Sierra Leone. I have held discussions with the NATO leadership about the way in which we might spread such good practice throughout NATO. I shall keep the hon. Gentleman informed of progress.

AIDS (Africa)

Ian Davidson: What steps the Government are taking to help curb AIDS in southern and western Africa.

Sally Keeble: The Government are strongly committed to working to combat HIV/AIDS, and provided more than £150 million for programmes in southern and western Africa last year. We continue to work with the Governments of developing countries, and other bodies, to prevent the spread of HIV/AIDS and to help those affected by it. We need to replicate the progress that has been made in Uganda, where the prevalence of the disease has been more than halved in the last decade.

Ian Davidson: Does the Minister accept that the scale of the problem is enormous, and that the resources required are substantial? If Britain and other countries are to be expected to play their part in fighting this evil, we must also ensure that governance in these areas of Africa is improved. Will the Minister tell us what steps are being taken to ensure that money given to fight AIDS is not being siphoned off or stolen?

Sally Keeble: My hon. Friend is right about the scale of the disease, and about the related problems. Each year, 2.3 million people die of AIDS in sub-Saharan Africa. While it is extremely important that we ensure that there is good governance, so that all the money that goes into fighting AIDS is spent properly, we do not at present have any evidence of the kind of problems that my hon. Friend mentioned. If he would like to provide me with any such evidence, I will certainly make sure that it is looked into, because we want to ensure that all the money goes into AIDS prevention and into treating the people who suffer from the disease.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Gwyn Prosser: If he will list his official engagements for Wednesday 26 June.

Robin Cook: Mr. Speaker, I have been asked to reply. [Hon. Members: "Hear, hear!"] If I may continue—my right hon. Friend the Prime Minister is currently attending the G8 summit in Canada. Today, the summit will discuss world terrorism and proliferation

Andrew Turner: Where's Prescott?

Mr. Speaker: Order. I do not want the hon. Member for Isle of Wight (Mr. Turner) shouting. He often shouts, and he must not.

Robin Cook: If I may continue, Mr. Speaker. Today, the summit will discuss world terrorism and proliferation. Tomorrow it will discuss how it can help to promote development and prevent conflict in Africa.

Gwyn Prosser: On the day that marks international drug abuse and trafficking day, will my right hon. Friend pay tribute to the hard-working people in Dover and elsewhere who police our borders and who have contributed to the year-on-year increase in the number of seizures of illicit drugs?
	Last week marked the second anniversary of the tragic discovery of 58 Chinese people found dead in a container in Dover. What progress have the Government made on cracking down on the evil people-smugglers and on improving border security on the other side of the channel?

Robin Cook: There can be no greater menace than those who make large profits out of trading on the misery and desperation of others. That is why we hope shortly to introduce proposals that will increase sentences for those who trade in human beings. We made good progress at the Seville summit on getting agreement on joint action—[Interruption.] Indeed, we did—to ensure that we take forward our joint policing into those areas of entry. The measures that we have taken in Bosnia, for example, have been dramatically successful, and have contributed to a 90 per cent. reduction in the number of people being trafficked by organised gangs.
	On my hon. Friend's point about the United Nations drugs day, we fully support the initiative by the UN, and the strategy of taking action on both supply and demand. My hon. Friend has already given the House figures on our success in cutting supply, and the whole House will want to congratulate the police and customs on their progress in seizing an extra £140 million worth of drugs in the past year. On the action against demand, we have doubled the amount of money available for treatment of those who abuse drugs, and we are on target to get the majority of drug abusers into treatment by next year. That is a solid achievement—[Interruption.] I would hope that the whole House, including Opposition Members, will recognise that drug addiction is not only tragic for the individual but a menace to the community, and that we must give it a high priority.

Eric Forth: rose—

Hon. Members: Hear, hear!

Eric Forth: When the Chancellor hit pensions with his £5 billion a year tax, he said that it was justified because of the buoyancy of the stock market. Last week the Prime Minister said that the stock market was
	"massively up on where it was five years ago."—[Official Report, 19 June 2002; Vol. 387, c. 272.]
	Is he right?

Robin Cook: My right hon. Friend was absolutely right in the statement that he made. I am surprised that the right hon. Gentleman requires a lecture on this from me. The nature of the financial markets is that they go down as well as up. Stock markets around the world have been going down in the past 48 hours. There is no way in which any Government can insulate their stock market from that effect.
	What is the right hon. Gentleman asking us to do—bring in price controls on stock exchange movements? I am surprised that the stock market going down should come as a revelation to him. Surely he must remember that during the Conservative years the stock market collapsed several times, and the change over the past few days is still only a quarter of what occurred in the worst week in the Conservatives' 18 years.

Eric Forth: When I question the Leader of the House at business questions, he is normally remarkably honest and straightforward with the House. In fact, on occasions he has even apologised to the House when he has been mistaken. What is it about appearing at the Dispatch Box at this time of the week that renders him unable to give a straight question? [Interruption.]

Mr. Speaker: Order.

Eric Forth: This is my first, and probably only, Prime Minister's questions. I was about to say that the Leader of the House may be representing the Prime Minister but he does not have to impersonate him. The fact is that the stock market today is almost 5 per cent. below where it was when the Chancellor first hit pensions. I shall give the Leader of the House another chance. When the Prime Minister said that the stock market was "massively up", was he right or was he wrong?

Robin Cook: My right hon. Friend was absolutely right. [Interruption.] I am not clear what other answer Conservative Members were expecting. My right hon. Friend was right with reference to the period from the general election to the time when that question was asked last Wednesday. As I said, stock markets went down even more spectacularly under the Conservatives. The difference is that, at the present time, we have a sound economy with the lowest inflation for 40 years, the lowest interest rates for 50 years, and 1.5 million more people in work. On all those points it is better now than on any single day during 18 years of Conservative Government. If the right hon. Gentleman does not find that good enough, what heights of new rhetoric can he scale to describe the appalling record that his party had in Government?

Eric Forth: Well, the Leader of the House really does have a touch of the Prime Minister today. The truth is that the Prime Minister was wrong, we know he was wrong, and what is more important, pensioners know he was wrong. The sad truth is that shares in pension funds have lost a fifth of their value as a result of the Government's pensions tax, and that is more than four times the fall in the stock market. May I ask the Leader finally whether he will apologise to pensioners for what the Chancellor has done to their pensions?

Robin Cook: I am astonished at the right hon. Gentleman's brass neck. I most certainly will not apologise for the Government's record on pensions. Next April, the average pensioner household will be £22 a week better off than under the Conservative party. We have increased pensions by double the level of earnings, whereas the Conservatives cut them behind earnings. We have provided a pensioner tax credit that increases the incentive for those who want to save, and will reward pensioners who have a little bit extra income from savings, whereas the Conservative Government continually penalised them by introducing a means test. I will most certainly not apologise to pensioners for our record.
	When the right hon. Gentleman next comes to the House, he may, because of his own special brand of compassionate conservatism, like to tell us how he will fill in the form from the Leader of the Opposition inviting him to spend a week with vulnerable people in his constituency. I should appreciate it immensely if he could tell us which week it will be and whether I can come, so that I can hear him explain to the vulnerable in his constituency how the last Conservative Government doubled unemployment, doubled homelessness and trebled the number of children in poverty. One week will not wipe out the memory of 18 years.

John Hume: In the light of recent serious public information about the murder of Belfast solicitor Pat Finucane, will the Prime Minister and the Government respond positively to the Finucane family's request for a special inquiry into that terrible murder?

Robin Cook: I know that this is of serious concern to the hon. Gentleman's constituents and his community. He will be aware that two investigations are in progress. Sir John Stevens has been appointed by the United Kingdom Government to conduct one of them, and we have also agreed with the Irish Government on a joint inquiry led by Mr. Justice Cory of Canada. Should Mr. Cory recommend a public inquiry, we will of course implement that recommendation.

Paul Tyler: A couple of weeks ago, the Leader of the House told me here:
	"I believe that the best, most secure and most transparent way to fund political parties that is least open to misconstruction is from the public purse."—[Official Report, 13 June 2002; Vol. 386, c. 1005.]
	This morning, responding to a debate on state funding in Westminster Hall, the Parliamentary Secretary, Lord Chancellor's Department, the hon. Member for Doncaster, Central (Ms Winterton), said that there was nothing wrong with the way in which political donations are sought and made. Which is Government policy?

Robin Cook: I must confess that I had other things besides visiting Westminster Hall on my mind this morning, but as always I will study Hansard with great care tomorrow.
	I made it plain to the House during business questions that I spoke as an individual, not on the Government's behalf; but I say now that the Government have absolutely nothing to apologise for in regard to their record on donations. We have indeed been open and transparent, and we still look forward to the Conservative party's response to my repeated challenges to publish the names of those from whom it received donations during its years in government.

Paul Tyler: Should not the Government have a policy on this issue? Is this not a matter of trust, given current concerns about the influence bought by, among others, Andersen, the owner of the Daily Express and the RMT? Do the Government not think it about time they settled the issue? Does the Leader of the House not recognise that the public think that when auditors, owners of major newspapers and major unions believe they are buying influence, it is time the Government had a policy so that trust could be maintained?

Robin Cook: The hon. Gentleman has raised the precise point on which I have expressed concern—that although we have been impeccable in declaring and screening our donations, they are open to misconstruction. That is why I personally believe that putting the matter in the hands of the British electorate through public funding is the best answer.
	The matter belongs to the British people, because it reaches fundamentally into the way in which their democracy is conducted. That is why it is right for the British people to decide, and why there should be a public debate.
	I am slightly surprised that the hon. Gentleman should suggest that the RMT is buying any influence. Spectacularly, I myself have refused to accept the money on the basis of an oath of loyalty. So have a dozen RMT Members of Parliament, and so should any honourable Member of this free and sovereign Parliament.

Roger Berry: Yesterday I received a distressing e-mail from my constituent Sue Brown, who is again under curfew in Bethlehem. Is she not right in saying that repeated Israeli invasions of the West Bank
	"cause untold misery, suffering and death to the hapless and largely innocent civilians of the West Bank"?
	Is she not right when she asks how on earth such action can be justified under international law, and in the light of successive United Nations resolutions?

Robin Cook: My hon. Friend is right to draw attention to a serious issue that is, I am sure, of concern to all Members. We warmly support President Bush's call in his speech the other day for a viable Palestinian state. The way to achieve that is through movement on both sides—an end to the occupation and the settlements on one side, and an end to terrorism on the other. Without both, we shall not see a successful return to the negotiating table. The future of both the people of Israel and the Palestinian territories depends on that return, because it is the only way in which we will achieve a secure and just peace.

Peter Lilley: Returning to the subject of the £5 billion a year stealth tax on pension funds, can the right hon. Gentleman name anyone who believes that siphoning off millions of pounds from pension funds does not undermine their ability to pay pensions? Can he name anyone, that is, apart from the Prime Minister and, of course, the late Robert Maxwell?

Robin Cook: If I remember correctly, the right hon. Gentleman had some responsibility for pensions during the previous Conservative Government. The electorate have already given their verdict on how he managed his stewardship of their pensions during his time in office and I am happy to put our records side by side. On the question of the withdrawal of advance corporation tax, the right hon. Gentleman is intelligent and well informed enough to know that that was done in order to ensure that we did not distort the tax system to encourage dividends rather than investment. He is a fair-minded man, so I am sure that he will be delighted to hear that that decision has succeeded and that investment in British industry is now £20 billion a year higher than it was under the Government of whom he was a member.

Martin Salter: Will my right hon. Friend join me in offering condolences to the 2,500 UK workers of WorldCom in my constituency, whose jobs are now at risk as their company teeters on the edge of bankruptcy—a bankruptcy compounded by corporate greed and dishonesty and a $3.8 billion dollar fraud covered up by crooked accountants? Does he agree that it is high time we heard less bleating and whingeing from the corporate world about the burden of regulation and saw more effective supervision of international accountancy practices?

Robin Cook: My hon. Friend is right to express the concern of his constituents about a matter that will be of grave concern for the economy of his constituency. On the issue of auditing standards and the quality of auditing, he will be aware that my right hon. Friend the Secretary of State for Trade and Industry has already set up an inquiry to consider ways in which we can improve the quality of auditing standards and whether we can learn any lessons from what has happened on the other side of the Atlantic. I am sure that that inquiry will wish to consider the latest collapse as well as the Enron collapse. We expect the report in the summer and we will look closely at any action necessary and try to take it as quickly as possible.

Laurence Robertson: Is the Leader of the House aware of the escalating problem of TB in cattle? In Gloucestershire, 1,500 whole-herd tests are yet to be carried out—a backlog caused by the shortage of technicians and vets. That situation has been brought about by the 10 per cent. cut in the budget for tackling that problem. Will he do all that he can to persuade the Government to provide sufficient finance to tackle the escalating problem of TB in cattle and, more importantly, will he speed up the Government's investigation into the real cause of the spread of that disease?

Robin Cook: The hon. Gentleman raises a matter that is of great concern to the farming community and which the Government take very seriously. I am slightly surprised that he should allege that the problem is exacerbated by a cut in funding. This Government have substantially increased the funding necessary to ensure that we police our economy and society and have safeguards in place. The hon. Gentleman belongs to a party that is committed to cutting public spending and whose leader has said that he would like to cut it to 35 per cent. of gross domestic product. That would be the equivalent of cutting the entire education and health budget and the salaries of all police officers. The hon. Gentleman cannot continue to support a party that demands cuts while at the same time demanding increased expenditure.

David Stewart: Does my right hon. Friend share my view that the greatest challenge facing the international community is fighting global poverty, when 1 billion people exist on less than $1 a day? Is not the war on poverty the acid test of the G8 summit? Does The right hon. Gentleman also agree that in the future the culmination of success must be enhanced debt relief and fair aid and trade? What we need is a new Marshall plan for Africa.

Robin Cook: I fully agree with my hon. Friend about the importance of the issue. That is why the G8 summit will examine tomorrow how the world's wealthier nations can combat poverty, child mortality and illiteracy throughout Africa. The UK Government go to the summit with the strength of having increased by half, since the last general election, the amount of aid that we give. We have also just made a commitment that we will increase by another billion our aid to Africa. That reverses the cuts experienced under the previous Conservative Government.
	It is right that the G8 summit should address the issue of world terrorism, but it is also important to bear in mind the fact that tackling world poverty can make an important contribution to that, as world poverty provides the breeding ground for terrorism and the recruiting ground for the fundamentalists.

Eric Forth: Does the Leader of the House agree with the Lord Chancellor's Department that the payment of fines in this country has become voluntary?

Robin Cook: I always find it prudent to agree with the Lord Chancellor's Department in all particulars.

Eric Forth: That was a remarkably complacent answer. We have discovered the sad truth from the National Audit Office, and the Lord Chancellor's Department has admitted it, and it is that fewer than two thirds of fines are collected now, and that half of all uncollected fines are written off.
	That would be bad enough, but it is not just fines that are failing. Will the Leader of the House say how many criminals failed to complete their sentences to community service last year?

Robin Cook: On the question of fines, we will study with care the forthcoming report from the Public Accounts Committee. I assure the House that there will be plenty of legislation, on the criminal justice and courts systems, in the next Session. That will enable us to address some of these issues.
	I cannot answer the question that the right hon. Gentleman asked. However, given that he asked it, I suspect that we are about to hear the answer.

Eric Forth: How well the Leader of the House knows me. The answer—and it will not give the right hon. Gentleman any pleasure to hear it—is that 40,000 criminals failed to carry out their full sentence last year.
	The Lord Chancellor has said that sentences
	"send important messages to the British people. They show what should not, and cannot, be tolerated."
	Is it any wonder that crime is soaring, when the message being sent to criminals by the failure of the Lord Chancellor's Department is that, in the unlikely event that they get caught and convicted, they will get off scot free?

Robin Cook: I congratulate the right hon. Gentleman on his courage in choosing to go on crime. He will be aware that the British crime survey shows that the amount of crime has fallen by a fifth under this Government. The number of police officers is going up, and I remind the right hon. Gentleman that that is in stark contrast with what happened under the Conservative Government, who doubled the amount of crime, more than doubled the amount of violent crime, and saw police numbers fall in five successive years. When I get back to my office and look up the figures on those who have completed community service, I suspect that I shall find that they were even worse under the Conservatives.

Liz Blackman: My local police have had reasonable success in targeting drug traffickers. Today, 1.5 tonnes of cannabis was confiscated, and five people were arrested. A little while ago, a large heroin organisation was busted, but the victims of addiction remain. Pursuant to the answer that he gave my hon. Friend the Member for Dover (Mr. Prosser)—that the amount in the drug budget devoted to support for victims has doubled—will my right hon. Friend undertake to keep the adequacy of the resources under review? Will he also monitor closely the pace at which new and more effective drugs are getting through to drug addicts?

Robin Cook: I am very grateful to my hon. Friend for raising, in her question, a very serious matter in a very serious and proper fashion. Of course, I give an undertaking that the Government will continue to make sure that we put in adequate resources to tackle the supply of drugs and to promote the cut in demand for drugs. We are confident that at present we are on course to achieve our target of getting 55 per cent. of drug users into treatment by 2004, two years from now. Obviously, we will keep the target under review. When we hit the target, we will want to go further, and I assure my hon. Friend that the matter will remain a high priority for the Government.

Peter Luff: Last week at his press conference, the Prime Minister attacked my constituents when, in response to their concerns about the proposed asylum centre at Throckmorton, he claimed that they wanted asylum seekers
	"anywhere else but where I am".
	Yesterday, the Bishop of Worcester said that that was
	"an unwarranted slur on the serious intentions of people from the churches of our diocese."
	Can the Leader of the House identify any Church, charity, trade union or non-governmental organisation that supports the Home Secretary's plans to put asylum seekers and refugees in large, remote, rural camps? [Interruption.]

Robin Cook: My right hon. Friend the Foreign Secretary appears to be having his own private exchange with Conservative Front Benchers on this matter. However, as he has quite properly pointed out, Conservative policy for a long time was to make sure that all asylum seekers would be detained.
	Of course I understand local pressures and the difficulties in local constituencies, but it must be right to ensure that we provide centres that can offer all the services required by asylum seekers, such as proper education facilities for children, proper health facilities and an ability to be integrated, through language, with the local community. I appreciate the local pressures that these factors give rise to, but this is a national issue. It is important to ensure that we provide a basis on which to hold and handle those who seek asylum. It is a vast improvement on the attitude of the Conservative Government, which was to pretend that the policy was not there and let asylum seekers disperse across the whole of the United Kingdom.

Huw Edwards: Will my right hon. Friend join me in congratulating all those students who will be graduating from universities in the next few weeks? Does he agree that our universities play a massive role in achieving the knowledge-based economy and enjoy a fine reputation throughout the world? While I welcome the Government's commitment to 50 per cent. access for all young people, does he agree that such expansion will require adequate funding for research and teaching and a fair pay settlement for academic staff, as well as looking at the problem of student poverty, so that those who can benefit most from higher education are not deterred by unreasonable debts?

Robin Cook: I fully agree with my hon. Friend. We have increased funding in higher education by a sixth. However, more important to the future of Britain as an economy and a country that can make its way in a highly competitive global economy is the fact that we now have one of the highest participation rates in higher education of any of the OECD countries, something of which we can all be proud.

Henry Bellingham: Is the Leader of the House aware that I was recently contacted by a constituent, Mr. Robert Blunden, whose wife sadly died of cancer last year? Her cancer specialist recently wrote to a national newspaper deploring the fact that he was prevented from using two new cancer drugs as the result of the National Institute for Clinical Excellence not permitting their use on the national health service. My question is simple: given the Government's welcome emphasis on cancer treatment in the NHS cancer plan, why are there no cancer specialists on that committee?

Robin Cook: I welcome the hon. Gentleman's support for our commitment to treating cancer. Indeed, we have increased the number of cancer specialists throughout Britain and are reducing the waiting time for treatment by them.
	On the case to which the hon. Gentleman refers, I am absolutely confident that the Government were quite right to make sure that we put the decision on whether a drug should be prescribed on the NHS in the hands of NICE, which represents medical opinion. It is much better that such decisions are taken by medical experts than that they are taken by politicians. I shall, of course, consider the hon. Gentleman's point and make sure that the Secretary of State for Health writes regarding the membership of NICE; but on the fundamental principle, I think that it is much better for doctors to decide such matters rather than the hon. Gentleman and I doing so across the Floor of the House of Commons.

John MacDougall: Will my right hon. Friend join me in welcoming the continued trend in the fall of unemployment, particularly since 1997? In Fife, especially in my constituency of Central Fife, unemployment fell by 14 per cent during that period, despite the dramatic loss of jobs in traditional industries. Will he join me in welcoming the many efforts made by unsung heroes who have contributed to this success, including Fife council, Scottish Enterprise Fife, and voluntary organisations such as the Leven development trust?

Robin Cook: I am happy to join my hon. Friend in congratulating all those who worked in the partnerships in Fife on making their contribution to cutting local unemployment. We should always remember that much of the progress in providing jobs and securing the local economy is made in the local community by members of that local community. It has also, of course, been helped by the measures that we have taken nationally, such as the new deal, opposed vigorously by the Conservative party, which has created 3,000 new jobs and placed people in such jobs in Fife—2,000 of them for young, long-term unemployed people. One of the great achievements of the Government is that we have almost removed long-term unemployment among our young people, who will be the work force of the future, and that is a great investment in the future of Britain.

Marion Roe: In response to the outrageous slur made by the Secretary of State for Education and Skills, who said that she would not touch some comprehensive schools with a bargepole, and in fairness to the pupils, parents, teachers and governors of good comprehensive schools, will the Leader of the House name names and tell the House to which comprehensive schools the Secretary of State was referring?

Robin Cook: What my right hon. Friend said in her speech was that she had taught for 18 years at a comprehensive, and would not have taught at any other type of school. I will not take criticism of my right hon. Friend from a Conservative party whose leader will not touch any state school with a bargepole when it comes to sending his children to school, and who has sent his children to Eton. Of course—[Interruption.]

Mr. Speaker: Order.

Robin Cook: Of course not all comprehensive schools are as good as we would wish; that is why we have introduced a new deal for schools which has resulted in our being able to take out of special measures the majority of the failing schools that we inherited from the Conservative party. If I remember rightly, the right hon. Member for Bromley and Chislehurst (Mr. Forth) was the Education Minister from whom we inherited them.

Meeting with French Interior Minister

Oliver Letwin: To ask the Home Secretary if he will make a statement on his recent meeting with the French Interior Minister.

David Blunkett: First, I congratulate the right hon. Gentleman on being elevated to membership of the Privy Council today. [Hon. Members: "Hear, Hear."] I am sure that it will make all the difference in the world.
	Yesterday I held a meeting with the Minister of the Interior in the new French Government, Nicolas Sarkozy. The meeting was the first to be held between us and the new French Government on tackling illegal immigration across the channel. This is not something that needs to divide the United Kingdom and France; it is not an adversarial contest, but a matter of finding a joint solution to shared problems. Migration has global causes and global consequences. No single country can solve its problems alone.
	Yesterday was a satisfactory start to the process, especially bearing in mind the fact that the National Assembly elections were held only 10 days ago. We have made concrete progress in a number of key areas. First, we agreed to install at the port of Calais British detection technology, including acoustic heartbeat detectors and millimetric wave imaging. A start will be made within weeks. We shall also provide the latest forgery detection technology in order to tackle the use of false identity documents.
	In addition, a package of measures to increase security at the Frethun freight depot was agreed. The success of the security investment at Coquelles has put increased pressure on the Frethun yards. Services have been disrupted and a great deal of cost has been incurred. It is therefore crucial that we close that loophole for illegal immigration as quickly as possible. We agreed to use our best endeavours to complete the double fencing at Frethun by 31 July, substantially speeding up the earlier timetable. The French Government will accelerate deployment of additional gendarmes and security personnel in the depots. A financial contribution will be made by the Strategic Rail Authority. That will allow the reintroduction of a full and reliable service no later than the end of September.
	We also agreed to enable our intelligence and operational officers to work together in joint teams. We are determined to work in partnership to detect, arrest and prosecute the criminal gangs who profit from the barbaric trade of people trafficking. To monitor progress, we shall establish a joint reporting system to track illegal immigration on both sides of the channel, and publish the statistics every six months.
	I also outlined yesterday the comprehensive measures that we are taking to reduce the pull factor to the United Kingdom, in particular by clamping down on illegal working and by spelling out the new measures in the Nationality, Immigration and Asylum Bill. That was welcomed by the French Government, who committed themselves to the closure of Sangatte, which is now a joint objective of both Governments.
	As I said yesterday, this is a marathon, not a sprint. I did not expect to secure full agreement on every issue yesterday. I specifically indicated that I did not expect an immediate resolution of a timetable for closing Sangatte. However, we made significant progress and a number of issues are now on the table for the next meeting, which will be held in Paris on 12 July. I know that the House will welcome this long overdue progress in resolving those difficult issues.

Oliver Letwin: I am grateful to the Home Secretary for his statement, and for his congratulations. We of course welcome the promises that he has received on security and joint monitoring from the French—without welcoming nearly so much the fact that Britain will be contributing millions of pounds to paying for that security. How is it that the French managed to persuade the Home Secretary that it was our responsibility to pay for security on their side of the channel? On how many occasions in the past years have promises been made to increase security on the French side of the channel, and what assurances does the Home Secretary have that on this occasion they will actually be fulfilled?
	How real was the offer to construct, in due course, a timetable for delivering the possibility, in due course, of closing the Sangatte camp? How did the Home Secretary manage to persuade the French Interior Minister that his accommodation centres—which, at the present rate, it can be calculated may cure the backlog of asylum applications in the UK over a period of 40 years and 11 months—would be sufficient, in his words, substantially to reduce the pull factor?
	I now turn to what is overwhelmingly the most important question, which the Home Secretary specifically avoided mentioning in his response: the bilateral agreement that used to be in place between Britain and France, which at one time provided that those coming from France to the United Kingdom would be returned to France within 24 hours, to have their asylum applications processed there. The Home Secretary has described me and my party as the "militant tendency" in pressing for a resurrected bilateral agreement, and I have therefore three specific questions to ask him.
	First, if it was always impossible to negotiate such an agreement with the French, how was my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the former Home Secretary, able to do so in 1995? To which miraculous powers does the Home Secretary ascribe that achievement? Secondly, if it is impossible to negotiate such an agreement with the French, is it not also impossible to negotiate it with other Governments—and if it is impossible to negotiate such an agreement with any Government, why did the Home Secretary take the trouble to legislate in the House and in the other place to provide for such bilateral agreements to be compatible with UK law?
	Thirdly, if it is impossible to negotiate such an agreement, why did the Home Secretary write an open letter to me on 23 May, in which he said:
	"I am committed to negotiating a new bilateral agreement with the French government. But I intend to negotiate something that will work".
	Is it not time for the Home Secretary to make an application to his right hon. Friend the former Home Secretary—the current Foreign Secretary—who is the agent who brought chaos to an asylum system that was once in order—[Interruption]. That person is now responsible for our diplomatic efforts; might he not be expected, notwithstanding the Home Secretary's brilliant assault on all the policies that he pursued when he was Home Secretary, to assist the current Home Secretary in negotiating with the French to achieve successfully what this country desperately needs—a new bilateral agreement?

David Blunkett: The right hon. Gentleman's first question was: why are we prepared to negotiate a commitment to the technology and security at the French border? The answer is very simple: this is a unique position—we are trying to persuade a country to prevent people not from getting into its territory, but from getting out of its territory. We are trying to persuade the French to stop people leaving France and entering Britain.
	We are prepared to use British technology—advanced as it is—to assist in the process precisely because if we can use the technology that we have at Dover in Calais, to prevent people from crossing the channel, they will not be able to claim asylum, so we will not incur the substantial costs of processing their applications for the first decision or the adjudication decision, or for the judicial review, the appeals tribunal or the further review, or the cost of removal. If we stop just a few dozen people wrongly claiming asylum—those who cannot show that they are at risk of death or persecution—we will save the amount invested in the millimetric and heartbeat technology several times over.
	The second question related to Sangatte. It was fairly obvious from the negotiations and from studying the French papers that it is necessary to persuade the French that actions taken concerning the closure of Sangatte will resolve the pull factor and the signals that are sent to individuals and traffickers, so that they do not end up with hundreds of thousands of people on the streets of Calais and surrounding areas. That is necessary not because this is not a French problem—it is—but because it becomes our problem if those people continue to try to get through the tunnel or across on ferries.
	In resolving and helping to sort out the French problem, we substantially resolve our problem. That is what an intelligent approach seeks to offer, and it is why I was prepared to spell out what we were doing in our own legislation and in non-legislative matters, which the French believed required legislation, to reduce the pull factor to this country. That is why, of course, I spelled out aspects of the new Nationality, Immigration and Asylum Bill, as the House would have expected me to, and those proposals were welcomed and understood.
	The reports in this morning's French papers, which I have looked at, were accurate and the quotes from myself and Nicolas Sarkozy were in line with what we actually said yesterday, as opposed to what someone made up along the way.
	The substantive question related to returning people to France. In 1995—two years before the Dublin convention, to which the then Conservative Government signed up—there was an interim gentleman's agreement to see the situation through to what was presumably believed to be a very welcome Dublin convention. I presume that the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who is sitting along the Bench from the shadow Home Secretary, will recall that very well. He will recall that, as he believed that the Dublin convention would solve the problems, he was right to agree in 1995 that the gentleman's agreement would cease once the Dublin convention was introduced. When it was implemented, of course, the gentleman's agreement ceased. I must say that the gentleman's agreement was not all that it was cracked up to be—last year we returned to France 6,000 people who had not claimed immigration status, whereas in the last year of the gentleman's agreement, just over 500 people were returned to France—[Interruption.]
	The right hon. Member for West Dorset (Mr. Letwin) is right to say, sotto voce, that many more people tried to get in last year than in 1996. That is true, and that is precisely why we have a much more substantial problem than we had when we inherited the Dublin agreement, which we had not signed up to. It is precisely for those reasons that I am taking steps now to reach agreement with France. I want an agreement on returners to original countries when the first decision has been turned down, and, as I said in my letter of 23 May to the right hon. Member for West Dorset, I want an agreement that will be workable and acceptable.
	I describe the right hon. Gentleman's words as coming from the militant tendency because in the 1980s and 1990s, the Labour party went through a process in which impossible demands and unsurmountable barriers were placed in our way—everyone knew that the demands would be unachievable—so that a handful of people could claim failure before we had even started on the policy concerned.
	That is what the right hon. Member for West Dorset did when he announced on the "Today" programme yesterday morning that I should simply turn people who arrived in Britain round and send them back to France. Any Member who seriously believes that every person arriving in this country who we believe might have passed through France can simply be turned round and sent back without negotiating terms of reference, and without an understanding that we have considered the case—as we are doing with the non-suspensive appeals and clearly unfounded cases—does not deserve to be in government.

Fiona Mactaggart: Is not one of the problems the continuing policy in France of allowing what I think the French call tolerated illegal presence? Despite their so-called robust preventive measures such as identity cards and so on, they continue to allow people from third countries who intend to claim asylum to avoid doing that while they are in France. In his very welcome discussions with France, has the Home Secretary been able to make any progress in persuading the French authorities to consider remedying that practice?

David Blunkett: On a lighter note, I did point out that, given the wine, the food and the sunshine—and the women—I was amazed that anyone would want to leave France to claim asylum anywhere else. My hon. Friend is entirely right to say that the tolerated illegal presence of so many people in France is a major problem. It means that those people are not encouraged to claim asylum, to seek another form of legal status or to leave the country legitimately. That is why the problem has accumulated in northern France. The problem also exists partly because the measures that have been taken make it very much more difficult for those people to leave northern France to reach Britain, and partly because of the pull factor that I have described and acknowledged this afternoon. In consideration of discussions not just with the Interior Minister but with the Justice Minister, with whom I am also seeking a meeting in July, I intend to press the point vigorously that those who are not there, and who, I presume, have not got French identity cards, should be dealt with rigorously so that we can get a grip on this problem.

Simon Hughes: May I join the Home Secretary in congratulating the shadow Home Secretary, the right hon. Member for West Dorset (Mr. Letwin), on his elevation to the Privy Council? I also join the Home Secretary in accepting the idea that when we can have good relations with our neighbours—including, obviously, France—we should seek to do so.
	Will the Home Secretary tell us whether the French Government are insisting on any preconditions or action from the British Government before the French Government implement any of their terms of the agreement? Has any estimate been made of the cost to the French Government of the measures that they are taking?
	Does the Home Secretary accept that closing Sangatte, building fences or having more gendarmes will not stop people moving around Europe? The only real substitute for the nonsense of a policy that Europe has to deal with asylum seekers would be a common way of processing all asylum seekers, wherever they appear in the European Union. We need a common set of conditions and entitlements to which they will thereafter be entitled, and a common basis for deciding who is a refugee and therefore entitled to that status. The logic of that is that we should have a common agency to act on behalf of all member states, so that there is a common standard throughout Europe.
	If we close the existing way of entry, how will Britain honour its obligation to allow people to come to this country to seek asylum legally? Given that we are not the nearest country to any of the land-mass countries in eastern Europe, how will we take our fair share commensurate with burden sharing if we close off all legal routes into the country for asylum seekers?

David Blunkett: The hon. Gentleman's first and last questions were the same: how do we facilitate a legal and legitimate route for those who face persecution or death? In the White Paper on 7 February, I spelled out the fact that we would commence negotiations with the United Nations High Commissioner for Refugees on a legitimate route for, first, a few hundred, and then for an expanded number of nominated and verified cases who could be allowed directly into the country, having sought refugee status outside Britain. That is the only way in which we will be able to make progress. We should discuss it with the United Nations and use the good offices of the Foreign and Commonwealth Office to see how we can facilitate such work in our embassies and high commissions in an acceptable way.
	The process is taking time, but I hope that we can make substantial progress, not least with the UNHCR, and on minors under 18, who form part of a worrying trend and are now fodder for traffickers. There are 2,000 youngsters with Kent social services alone.

Simon Hughes: Six thousand in the country.

David Blunkett: Six thousand in the country as a whole.
	It is true that simply putting higher fences round Frethun and closing Sangatte will not solve the overall problem. I agree that substantial measures must be taken EU-wide both in sharing the challenge and in finding administrative ways of dealing with it. However, I am not sure about a unified central agency. All of us, including those working for it, know how difficult the role of the immigration and nationality directorate is in this country. God knows what it would be like if it were run from Brussels. However, I accept that a common issue needs to be shared, with a common solution.

Gwyn Prosser: I welcome the new joint arrangements—and I say that as someone who has been highly critical of the slowness with which the French have moved to secure their sites. I welcome the new approach.
	Does my right hon. Friend agree that if the French authorities can build a system that approaches anything like the level of security that we have in place in the port of Dover—my right hon. Friend and I looked at the measures for detection, forgery surveillance and other matters only last week—we shall be near to closing the last of the gaps in the security system, and to bringing order back to it? That will give confidence to my constituents and others that we have the system under a measure of control.

David Blunkett: I again congratulate my hon. Friend on the way in which he has handled a very difficult situation. Without any spin and advance preparation, last Monday he and I saw the operation of the new technology that detected the presence of people in a vehicle coming from France. Five people had been picked up from the same vehicle on the French side of the channel, but because the French did not have the equipment to look deep into the freight being carried, they had missed half the human cargo. That is why it is crucial to do that job, not merely for border protection purposes, but in a humanitarian sense, too. We all remember the desperate incident in which 58 Chinese people died because people were prepared to make money out of sacrificing their lives.

Elfyn Llwyd: The Leader of the House earlier today and the right hon. Gentleman rightly referred to the evils of people trafficking and the need for legislation. When does he anticipate that draft legislation will be available for scrutiny?

David Blunkett: We have a partial measure in the Nationality, Immigration and Asylum Bill. I promised when we published the Bill and on Second Reading that the sentencing and criminal justice legislation, which we are committed to introduce in the next Session, will include measures necessary to increase the penalty to 14 years and to tackle trafficking, including trafficking for sexual exploitation purposes. The legislation will be available for scrutiny as soon as it is drafted.

Tom Levitt: I find it a little astonishing that the Conservative party, having tabled the private notice question, cannot find one Back Bencher to contribute.
	Does my right hon. Friend believe, as I do, that one reason why so much attention has focused on Sangatte and the tunnel in recent months is our success in reducing illegal entry into this country by air, lorry and boat? Does he accept, as I am sure he did in his opening remarks, that the present situation is doing grave damage to the rail freight industry, its reputation and its prospects? He talked about resolving that problem by September, and I hope that he will do whatever he can to restore the status quo on rail freight for British exports.

David Blunkett: I agree entirely about the freight industry. Freight operators have had to contend with horrific circumstances that are deeply undesirable from their point of view and for the commercial well-being of our country. The installation of double fencing by the end of July and the substantial increase in security personnel, which the French have promised, will facilitate the provision of the electronic surveillance necessary to back up the fencing. I hope that by the August deadline the fencing will have made an enormous difference to the difficulties currently experienced and to the rapid return of a full service.

Norman Baker: What conditions did the French Interior Minister require the British Government to meet before he would agree to the closure of Sangatte? Will the right hon. Gentleman comment on, and rebut if necessary, a statement in one of today's nationals that he has allegedly pledged to introduce new measures to curb illegal working, including a national identity card scheme, as part of the agreement? Is that true?

David Blunkett: No, there are measures in the Nationality, Immigration and Asylum Bill that relate to our position on illegal working. We made our view clear when we clamped down on that problem by developing ways to improve on section 8 of the Asylum and Immigration Act 1996. I said that we will shortly undertake a consultation on entitlement cards. I made that clear to the House in an answer on 5 February and reiterated it in a statement to the House on 7 February. The consultation measures that I mentioned to the French were only what I reported to the House several months ago.

Tam Dalyell: Were he so minded, the Home Secretary could legitimately answer my question by saying, "Easier said than done." Although I do not doubt that the detection equipment for forgeries is now formidable, what about the forgers themselves? Are not some people making a mint of money out of forgery? What effort is being made with Governments in the far east or elsewhere to get at the root of those who are doing the forging, who are making enormous and odious profits?

David Blunkett: Easier said than done, indeed, but I will give my hon. Friend a more comprehensive answer than that. The commitment to joint intelligence working is a step in the right direction to get people to acknowledge that there is a worldwide problem and that people will go to whatever expertise is available anywhere in the world to obtain fraudulent documents. Therefore, it is a common problem.
	The European Union in the form of the Justice and Home Affairs Commissioner, and his equivalent in the United States, are committed to working with individual Governments on finding a way around the problem. We will need to adopt more secure methods, in addition to the passport control measures, to establish that we are part of the strengthened system, which in future will include biometric techniques. Otherwise, it is almost certain that the United States will reintroduce visas.

George Foulkes: You will recall, Mr. Speaker, that on Monday I asked my right hon. Friend the Prime Minister whether he would ensure that security measures at Sangatte freight depot are speeded up. Naturally, I am delighted that my right hon. Friend the Home Secretary is back so quickly—it makes me feel that I have more power on the Government Back Benches than I ever had on the Government Front Bench.
	Unlike my hon. Friend the Member for High Peak (Mr. Levitt), I had assumed from my right hon. Friend's statement that EWS and other freight operators would be able to run normal services after 31 July, when the security measures will be in force. Will my right hon. Friend confirm that that is his expectation? When he meets his counterpart in July, will he ensure that all the work is on schedule, because in the past there has been some slippage?

David Blunkett: I will do my utmost, here and elsewhere, not to claim deadlines, timetables or success where they do not exist. I indicated that double fencing and security personnel measures will be in place by the end of July. That will substantially improve the ability of EWS to run its services, but the electronic and surveillance measures inside the terminal will not fully complement the external security until September; only then will we be able to guarantee the substantial turnround that has been achieved at Coquelles.
	I agree entirely with my right hon. Friend's second point. I am extremely pleased that his intervention earlier this week was so successful.

Julian Lewis: Following the suggestion of the Father of the House about focusing on the forgers, does the Home Secretary think that there is potential for the security and intelligence services to try to infiltrate the lines of illegal immigration, so that people inside the system can, as it were, expose it from the inside? I appreciate that at present terrorism is their top priority, but surely that would be one way of exposing what is going on and discovering who is organising it.

David Blunkett: Yes, I do. I was deeply impressed when I went to see Operation Reflex yesterday. Every agency, including the security agencies combined, were working in unison and with their equivalents in Europe and elsewhere, precisely to try to bring that sort of expertise to bear. Given that the traffickers are organised in a $12 billion business, and given that the misery it causes is so great, we are justified in allocating even greater resources to our endeavour.

Jon Owen Jones: In addressing the pull factors, does my right hon. Friend agree that it is important that we should have a reliable and compatible system that identifies who is in the country and ensures that those who apply for employment, education or other benefits are truly entitled to do so?

David Blunkett: This very interesting question will be addressed next month in the consultation document on entitlement cards. I have given an undertaking, both publicly and in Government, that that will deal with the pros and cons of such a card. I am absolutely certain that the issue of proper and acceptable identification for employment purposes will form one of the pros, rather than one of the cons.

Roger Gale: I apologise to you, Mr. Speaker, and to the House for the fact that preparation for a Select Committee hearing prevented me from hearing the question from my right hon. Friend the Member for West Dorset (Mr. Letwin), to whom I add my congratulations, and the Home Secretary's answer, but modern technology enabled me to hear all the exchanges in my own office.

Mr. Speaker: Order. The hon. Member must be in the Chamber to hear statements. I therefore cannot call him. I thank him for listening to the exchanges, but I must put it on the record that hon. Members must be in the Chamber to hear the statement, not listening on a monitor.

Mike Gapes: My right hon. Friend is aware that the geography of France is very different from that of the UK. France has borders with a large number of countries. Did my right hon. Friend have an opportunity to discuss what the French Government are doing to secure their borders with their other neighbours, and what might happen in future as desperate or gullible people still try to come to this country? Are the French Government prepared to start thinking about their eastern and southern borders?

David Blunkett: My hon. Friend is right to say that the eastern and southern borders of France are extremely important. That is why discussions both at the Justice and Home Affairs Council and in Seville concentrated on that wider issue, including questions around accession countries. There is a much broader issue of collaboration on border control and surveillance, and on the unified handling of those who clandestinely enter the European Union. The French Government are interested, but I will not speak for them; they can speak for themselves about acquiring the technology that I described this afternoon. I hope that British companies will be able to benefit from that.

Points of Order

Bernard Jenkin: On a point of order, Mr. Speaker. As the question of the immunity of British, American and other forces operating abroad on peacekeeping duties has become a bone of contention between the United Kingdom and the United States in the United Nations, threatening the continuation of the UN peacekeeping mandate in Bosnia, I raised the issue on Thursday last week and asked the Secretary of State for Defence about it. He said:
	"On the ICC"—
	the International Criminal Court—
	"the Government negotiated an effective immunity for British forces . . . Obviously, that degree of immunity is available to any country that chooses to sign the treaty."—[Official Report, 20 June 2002; Vol. 387, c. 413.]
	Today, when giving evidence to the Select Committee on Defence, the Secretary of State corrected that statement. He said:
	"Immunity is not quite the right word."
	He went on to explain that the only protection from malicious accusation will be "appropriate procedures" in the International Criminal Court. In the circumstances, would it not be appropriate for the Secretary of State to correct the record and explain why the Government's policy is in such a mess?

Mr. Speaker: That is a matter for the Secretary of State; it has nothing to do with the occupant of the Chair.

Roger Gale: On a point of order, Mr. Speaker. On Monday, during his statement following the Seville summit, the Prime Minister indicated in response to a question from me that the Sangatte protocol, which is directly relevant to the statement that we heard earlier, was overtaken by the introduction of the Dublin convention. My understanding is that the Sangatte protocol was signed following the Dublin convention and in the light of the effects of the Dublin convention, and therefore takes precedence over it. That being so, and the Prime Minister being aware of that, have you had a request from the Prime Minister to correct his statement?

Mr. Speaker: Those are matters that the hon. Gentleman will have to put to the Prime Minister. I chair the proceedings of the House of Commons; I do not answer questions on various protocols.

Indirect Taxes (Disclosure)

Mark Hoban: I beg to move,
	That leave be given to bring in a Bill to require retailers to include on receipts the amount of VAT and excise duties paid on goods and services purchased.
	I am not sure whether anyone knows how much tax they pay. Those in work will know how much national insurance and pay-as-you-earn they pay from their payslips and P60s, and those who are subject to self-assessment will get a summary of their income and the tax that they have paid on it, but direct taxes are only part of the picture. With very few exceptions, almost every one of us will pay indirect taxes in the form of excise duties, fuel duties and VAT on the goods and services that we buy. Occasionally, we will get a VAT receipt or bill that sets out the net amount, the VAT charged and the gross amount; hotel bills, telephone bills and invoices from tradesmen usually fall into that category. However, we are rarely told how much VAT we have paid, and even more rarely will we know how much we have paid in excise duties.
	If the revenue raised were trivial, it would not matter too much how much we paid. It would be of no consequence to us, as a few pence here and there would not make much difference. However, the amount that we pay through such taxes is not trivial. This year's Red Book shows that the outturn for indirect taxes for 2001–02 is as follows: VAT, £61.1 billion; fuel duties, £21.9 billion; tobacco, £7.8 billion; spirits, £1.9 billion; wine, £2 billion; and beer and cider, £3 billion—a total of £97.8 billion. In comparison, the yield for income tax in the same year was £110.2 billion, so VAT and other indirect taxes raise almost as much as income tax. As I said, everyone knows how much income tax they pay, but how many people realise that they are paying almost as much through VAT and other indirect taxes?
	The cost of VAT and other taxes soon mounts up. Let me give a few examples. An England fan watching the match last Friday and wearing a £30 England top would have paid £4.46 in VAT for the top. The tax on the four cans of beer that he might have drunk during the match—costing, say, £4—would be £1.20. If he decided, having heard the result, to drown his sorrows in a bottle of whisky costing £14, he would have to pay £8.50 in tax.
	As another example, The Grocer, a retail trade magazine, has a standard shopping basket called "The Grocer 33". In the 15 June edition of the magazine, the cheapest shopping basket containing the 33 items featured was £38.67, of which £5.83 went to the Chancellor in a combination of VAT and excise duties. More than 15 per cent. of the amount paid at the till went straight to the Exchequer.
	How many people know that a litre of petrol costing 74.6p includes duty of 46p and VAT of 11p? Refuelling a family car with a 40-litre tank will benefit the Chancellor to the tune of £22.80. At the time of the petrol tax protests a couple of years ago, people knew how much they were paying, but memories have faded. The Bill would ensure that every time people filled up they would know just how much they were paying the Chancellor in taxes.
	As those examples show, VAT and other duties mount up quickly, but such taxes have another aspect that we need to consider. I believe that indirect taxes are a form of stealth tax, because no one knows how much tax they are paying to the Treasury every time they make a payment. When a tax is taken by stealth, people cannot assess the true cost to them of the services that the Government provide. Of course, that is in the Government's interests—it is far better to raise taxes by stealth than take tough decisions on spending priorities. It is far better to extract the money in taxes from the purse or the wallet, where it is mixed up with the price of a bottle of wine or a litre of petrol, than to take it from the pay packet, where the tax paid is all too visible. It is far better to add the tax to the price of goods, so that retailers take the blame for price increases. We need to remove that opportunity for the Government to disguise the amount of tax that they raise from our spending.
	If people do not know how much tax they pay, how can they judge whether they are getting value for money for the services that they receive? If their perception of the amount of tax that they pay is based solely on the amount that is taken from their pay packet, what reaction will they have when they realise that they are paying almost as much again through indirect taxes? Making sure that taxpayers know how much indirect tax they are paying in total would change the dynamic of the relationship between taxpayers and the Government. A greater awareness of the cost of services would lead to people giving much more thought to value for money. More people, whether their taxes are taken through their pay packets or through their spending, would question decisions on how money had been spent—the true cost of Government would become known. How much more dissatisfied would people become with failing public services when they realised that those services were costing them twice as much as they thought?
	Another group of people—those who pay no income tax at all—would realise the extent of their contribution to the state. They would know how much tax they were paying towards Government services. Those on benefits would see how much of their income they have, in effect, paid for themselves through indirect taxes extracted through their weekly shopping and other spending. To use a biblical allusion, even the widow would see how much of her mite the Chancellor was taking.
	In an ideal world, we would receive a statement setting out the taxes that we have paid—both direct and indirect—so that we could see at a glance the tax burden that each of us suffers personally. I readily accept that that is impractical, but we can progress towards the goal of increasing the transparency of our personal tax burdens by requiring those who supply us with goods and services to give us receipts telling us how much tax we have paid on our shopping, whether it is for food, drink, electrical goods or petrol. Every time we bought something, we would know straight away how much of what we had paid the retailer or the publican would go to the Government. It would be a powerful jolt to each of us if we knew that most of the price of a bottle of wine was going to the Chancellor; perhaps we would stop and think about whether we were getting value for money. That is what they do in the United States. Every receipt shows the amount of sales tax that one has paid. Perhaps that is one reason why people in the US are much more conscious of the taxes that they pay and why taxes may be lower. People who know how much tax they have paid are more likely to hold the Government to account, so the pressure to restrain spending growth and to ensure that each pound of tax is spent wisely is great. We should perhaps learn that lesson from the United States.
	This is a simple measure that I hope and believe would change the political climate. Politicians would find it less tempting to increase indirect taxes rather than income tax because people would be able to see the increase every time they paid for their shopping. Realising the full extent of their tax bill, voters would challenge the Government on value for money. Everyone would be able to understand the price that they pay for the Government services that they receive and to decide whether they are getting value for money.
	It is time to lift the lid on taxes so that we can have a proper debate about how much we pay and the value that we get. Ensuring that we know how much VAT and other indirect taxes we pay on goods would be the start of that process.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. Mark Hoban, Dr. Andrew Murrison, Mr. Hugo Swire, Mr. Mark Field, Mr. John Baron, Mr. Mark Francois, Mr. Mark Simmonds, Mr. David Cameron, Chris Grayling, Mr. George Osborne, Mr. Paul Goodman and Mr. Peter Duncan.

Indirect Taxes (Disclosure) Bill

Mr. Mark Hoban accordingly presented a Bill to require retailers to include on receipts the amount of VAT and excise duties paid on goods and services purchased: And the same was read the First time; and ordered to be read a Second time on Friday 19 July, and to be printed [Bill 155].

Tax Credits Bill (Programme) (No. 2)

Motion made, and Question put forthwith, pursuant to Order [28 June 2002],
	That the following provisions shall apply to the Tax Credits Bill for the purpose of supplementing the Order of 10th December 2001:

Consideration of Lords Amendments

1. Proceedings on Consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion at Ten o'clock on the day on which those proceedings are commenced or, if that day is a Thursday, at Seven o'clock on that day.

Subsequent stages

2. Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—[Jim Fitzpatrick.]
	Question agreed to.

Orders of the Day
	 — 
	Tax Credits Bill

Lords amendments considered.

Mr. Speaker: I draw the House's attention to the fact that privilege is involved in Lords amendments Nos. 2 to 6, 11, 15 to 17, 19, 22 to 27, 32, 35 to 37, 39, 52, 53, 66, 71, 75, 76, 78, 80, 81, 85 and 102, which are to be considered today. If the House agrees to the Lords amendments, I shall ensure that an appropriate entry is made in the Journal.

New Clause

Lords amendment: No. 1, after clause 2, to insert the following new clause—Annual report to Parliament—

Dawn Primarolo: I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Speaker: With this we may take the Government amendment in lieu, a new clause—Annual reports.

Dawn Primarolo: Noble Lords introduced the new clause in a desire to ensure that Parliament was furnished with sufficient information about the operation of tax credits properly to scrutinise that operation. That is undoubtedly a wholly desirable intention and the Government wish to ensure that there is maximum transparency in providing information on the operation of tax credits and in enabling proper scrutiny.
	As Baroness Hollis explained in another place, the sort of information sought by the proposed report will be available through existing channels, primarily the board of the Inland Revenue's annual report, which is laid before the House each year. Nevertheless, we are sympathetic to the Lords' view that it would be useful for the relevant information to be contained in a single document, and I am therefore pleased to move a Government new clause in lieu of the Lords amendment.
	The Government new clause covers much the same ground as the amendment made in another place. There are some changes in the drafting, and it would be helpful if I explained them in more detail.
	First, it is properly up to the board of the Inland Revenue, rather than my right hon. Friend the Chancellor, to produce such a report and present it to the Treasury. As hon. Members know, the Inland Revenue reports to Treasury Ministers. That is why subsection (3) of the new clause imposes on Treasury the requirement to lay the report before both Houses.
	Secondly, the Lords amendment intended that the report should include the amount of tax credits paid out each year as reported in the Inland Revenue's departmental accounts. That was not clear in the Lords amendment and subsection (2)(a) of the Government new clause sets it out in detail.
	Let me consider the other items that we propose to cover in the annual report. Subsection (2)(b) makes it clear that the report will set out the number of awards of each tax credit in the year. The Inland Revenue currently publishes detailed statistical reports on the number of awards of working families tax credit and disabled person's tax credit on a quarterly basis. However, the Government understand the value of including information about awards in an annual report on tax credits. That matter is therefore now covered.
	Subsections (2)(c), (d) and (e) cover information relating to compliance inquiries, penalties and prosecutions. Of course, there must be the utmost transparency in reporting the Inland Revenue's compliance activity. This was a matter of considerable concern to hon. Members during our debates on the Floor of the House and in Committee. Much of this information is already provided in relation to the working families tax credit and the disabled person's tax credit, as part of the Inland Revenue's annual report, but the Government acknowledge the convenience of bringing all the information together in a single report.

Steve Webb: On a point of clarification, I am following the Paymaster General's references to subsection 2(b), 2(c), 2(d), and so on, in the Government's amendment in lieu. However, these provisions are numbered 1(b), 1(c), 1(d), and so on, on the Order Paper, and I wonder whether I have a different version to the one that the right hon. Lady is looking at. It is on page 2341 of the Order Paper. I just want to be sure that we are looking at the same amendment.

Dawn Primarolo: I most certainly hope that we are looking at the same amendment, otherwise I would be moving something that was not before the House, which would be even more difficult. I know that the House fully appreciates that I always try to be as helpful as I possibly can, but anticipating the views of the House on a matter that is not yet before it would be beyond even my ability to ensure that Members are properly advised. Perhaps the hon. Gentleman will allow me to finish making these points, because I want to make it clear that the amendment before the House today is the Government's amendment to replace the Lords amendment. It provides for the same information, but in a form that is readily translatable into our legislation. I will return as quickly as I can to the hon. Gentleman's question about whether we should be referring to subsection 1(c), (d), (e) and (f); certainly, in terms of how the amendment is drafted, it should read "1(a), 1(b), 1(c), 1(d)". I can only say that perhaps when I was putting my notes together, I transposed numbers that I should not have done.
	Subsections (c), (d) and (e)—I shall stick to calling them that—cover compliance inquiries, penalties and prosecutions. As I was saying, there was much discussion in the House and in Committee about this. Much of this information is already provided in relation to the working families tax credit and the disabled person's tax credit, as part of the Inland Revenue's annual report, but hon. Members and noble Lords made the point that they would prefer it to be brought together in one publication. To be perfectly honest, I do not think that the House would expect us to disagree on this point about duplication, in such an important piece of legislation, for the sake of an argument about whether the information has already been published in one report, or whether it should be published in another.
	Finally, the House will no doubt be aware that the new clause does not include reference to the cost to employers of operating tax credits. The Government continue to take the view that it would not be appropriate to provide an estimate of employers' costs in an annual report. That matter is properly and comprehensively addressed by the regulatory impact assessment of the Bill. That assessment is being revised in the light of announcements made in the Budget, and the revised assessment will be made available to Members of both Houses.
	Regulatory impact assessments are the right place to deal with the impact of tax credits on employers. That is the process that the House now uses to assess all its legislation, in terms of its likely impact on employers. The Board of Inland Revenue cannot be responsible for accounting formally for costs other than its own. More important, the assessment of employers' costs does not need to be taken on an annual basis. The assessment of the impact on employers is based on the provisions of the Bill. Such an assessment will not fluctuate significantly year on year, because there is a constant set of legal obligations. As the obligations of employers do not change, the assessment of the impact on employers is not likely to change.
	I remind the House that the Government produce comprehensive impact assessments whenever legislation that contains a significant regulatory impact is introduced or amended. The Government take the regulatory impact of legislation seriously. We introduced the concept of a regulatory impact assessment, and we intend to be nothing less than transparent on this issue.
	I do not want to revisit the debates that we had in Committee about the changes in the Bill, such as the lessening of the requirement on employers and the £1 million a year saving that is expected as a result of these changes, which has been widely welcomed by employer groups. I hope from what I have said about the importance of regulatory impact assessments that the House will appreciate that we keep a close eye on these matters.
	The Government have listened sympathetically to the arguments put in the other place, as we did on many issues when the Bill was considered in Committee in this House. We have considered the arguments put in the other place for an annual report, and we want to be helpful to their lordships and to hon. Members in this House. I urge the House to accept the Government's amendment in lieu of their lordships' amendment. The only issue that the Government's amendment does not deal with is the annual assessment of the impact on employers. To all other intents and purposes, the Government amendment is the same and is correctly drafted to fit into our legislation.
	I am grateful to the hon. Member for Northavon (Mr. Webb) for correcting my references to subsection 2: I should have said subsection 1. I am sure that the record will ensure that that correction is made.

Howard Flight: The Bill seems to have been dogged by incorrect definitions and references. As the Paymaster General said, the Government are seeking to substitute their own prescription for an annual report in lieu of a rather broader if less specifically defined annual report prescription passed on an Opposition amendment in the other place.
	The purpose of the annual report as introduced by Conservative Peers is to ensure the submission of data giving an account of the care and management of tax credits. In particular, the report would contain estimates of the total take-up of each tax credit, the statistical and other assumptions on which such estimates were made, and the actual take-up of each tax credit. The Opposition amendment prescribed that the board's reports should be published by the Treasury. As the Paymaster General said, it is correct that the report should be made by the Board of Inland Revenue to the Treasury.
	The key point is that Parliament should know when the take-up of any tax credit is less than the forecast level, and the report would set out the estimate of the amount of moneys not spent by reason of the deficiency of take-up to which that estimate related. It would also include the Government's proposals for increasing take-up to the forecast level. It would deal with fraud, and with other issues on the Government's list.
	The report is considered necessary because of the vastness and complexity of the Bill and the fact that the new arrangements are untested. We still fear that there could be major administrative difficulties in their implementation. Unless the legislation is monitored, what is actually happening will be inscrutable for some time.
	Lady Hollis described collecting the information from existing sources as a simple cut-and-paste task. Perhaps I am a little slow-witted, but I do not think collating such information is at all easy, and I think it is right to require it to be presented in a digestible form. Conservative Members are pleased that the Government have accepted the case for a single, clearly understandable—I will not say "easily understandable"—report.
	The Government's alternative raises certain issues. The Paymaster General has commented on the differences between the two proposals, but I should like to extract a little more information before agreeing to the Government's version. Take-up is a key issue on which the Paymaster General did not comment. If the measure is about what it is supposed to be about—helping the needy—a crucial aspect will not have been covered if we do not know whether it is being effective, what the targets are, and so forth.
	The reference to numbers in what I think is subsection (1)(c), not subsection (2)(c), could be interpreted to cover the process of reporting on the estimated and actual take-up and the reason for the difference, if any, and on what the Government are doing to improve take-up. I should be grateful if the Minister could elucidate a little further.
	The Government seem to think it fairly impractical to report on costs to business. There is an argument to that effect, but if the Bill encounters administrative problems, it will be to employers that the Revenue will be forced to go to find information it may be seeking in order to check that awards have not been made that are materially in excess of entitlements. The Government, MPs and indeed businesses should want to know whether costs to businesses are turning out to be significantly greater than was estimated. I ask the Paymaster General to consider, at least, avoiding a meaningless exercise and requiring the report to include any comment on whether there is evidence on administrative costs to business are proving larger, or indeed smaller, than expected.
	Take-up is crucial to whether this complex machinery helps those who are most in need. In Committee and on Third Reading, I observed that it was somewhat ironic that when in 1974 the outgoing Conservative Government proposed similar arrangements for tax credits, then called negative income, it was the leaders of the Labour party who produced a minority report warning that such mechanisms might be rather blunt and unsuccessful in helping those most in need. Despite all the wonders of modern computers—which invariably go wrong or break down—the basic issue remains of whether the tax credits will do their first duty of helping those who are in real need. We believe that an analysis of, and report on, take-up is important and we hope that the Government will confirm that their reference to numbers will cover that point.
	The second area of concern, to which the Paymaster General has already referred, is the investigations into fraud and what I call fiddling, because most of the problems will not be of sufficient magnitude to deserve the label of fraud. It is important that we know what is happening, including how many prosecutions and convictions have occurred. My hon. Friend the Member for Hertsmere (Mr. Clappison) will talk in more detail on that issue later, but new subsection (1)(c), (d) and (e) appear to cover that territory and we are happy with that.
	On the issue of cost to business, the history of the Bill shows a little obfuscation. If the Government expected costs to decline or be less than forecast, they might have been keen to boast about that. If they are unwilling to say anything, we infer that they think that the news could be bad. In the other place, the Government responded that their initial estimate was that the new working tax credit and child tax credit arrangements would cost business £11 million per annum less than the WFTC. We are pleased to hear that, but it was only after being pressed that the Government came clean that the cost to business had been £100 million a year. Therefore, it will still be £89 million a year. [Interruption.] The Paymaster General will find that Baroness Hollis gave that figure in the debate in the Lords.

Dawn Primarolo: There is no secret about that figure. The regulatory impact assessment clearly details the figure and I have given it repeatedly in the Chamber. Baroness Hollis was not imparting any new information, because I even gave that information on Second Reading.

Howard Flight: I am delighted to be corrected, because that means that the Government will have no problem keeping tabs on the future cost to business. If there is any significant increase, they will be able to tell us about it.
	Problems could arise because the Inland Revenue will have a demanding task when it comes to check awards paid against entitlements at the end of the year. One key area will be whether people have met the requirements for number of hours worked. Presumably, except for the self-employed, that check can be done—if the Revenue wishes to go further than what people report to them—only by making inquiries of employers of the number of hours worked. If the administrative difficulties that I fear arise, employers could have to deal with large numbers of inquiries from the Revenue to check information, and that could add considerably to costs.
	The overall background to the need for a report is that the complex new arrangements must be monitored to determine whether those in need are getting the help that they need. I confess that our concern is that the general drift of policy, and especially the contents of the Bill, is that the Government should be seen to be giving money to large numbers of people. Some 6.5 million families—38 per cent. of the total—will be eligible for the means-tested benefits. The Government seem more concerned with that than with focused efforts to help those in need.
	There are widespread concerns about fraud and fiddling, and the House will be familiar with the much quoted fears of the right hon. Member for Birkenhead (Mr. Field), who is worried that
	"the whole of the family tax credit venture is fraught with great dangers. It offers huge bonuses for dishonesty. It strengthens the employers' hold over working people—'these are the conditions: cheat and both of us will be better off'. It thereby pulls employers into a spider's web of dishonesty and corruption. It rewards employers paying low wages. It takes the pressure off improving productivity and thereby the scope for increasing real wages."
	It is crucial for the House, the Government and the community to know, when the system is up and running, whether those fears prove justified. We are pleased to note that the Government have covered that.

Dawn Primarolo: The hon. Gentleman has alluded to some points made by my right hon. Friend the Member for Birkenhead (Mr. Field). I refer especially to the point about depressing wages. Will the hon. Gentleman explain why the previous Conservative Government would not support the introduction of the minimum wage? If he is so concerned about depressing wages, why did the previous Government allow that to happen in the absence of a minimum wage?

Howard Flight: I do not think that we are really discussing minimum wages today, but their very existence is a tacit admission by the Government of the need for legal protection in a situation where too many factors are driving wages down. As I have noted before, I have to my regret encountered in my dealings with businesses a feeling among many of them that the provision is to be greatly welcomed, as it can be considered to be a big subsidisation of wages.

Dawn Primarolo: Okay, let us try this another way, as I do not think that the hon. Gentleman has answered the point. The former Select Committee on Social Security conducted an investigation specifically into the use of tax credits in the United States, to see whether their existence depressed wages. Tax credits have been in use for much longer in the US, but the Select Committee found no evidence that they depressed wages there. Is the hon. Gentleman disagreeing with that assessment? The Conservative party supported neither tax credits nor the minimum wage, yet there is no evidence that they depress wages.

Howard Flight: First, I cannot resist noting, in connection with the US experience with similar arrangements, that evidence did emerge that there had been some $4.7 billion in unjustified claims. Also, the Select Committee duly noted the serious concerns raised about increased potential fraud in working families tax credit, as compared with family tax credit.
	These are new arrangements. Let us hope that the right hon. Lady and the Committee are correct that the measure will not depress remuneration. However, rather cynically, one reason for businesses welcoming many aspects of the Bill is because it is seen in the business community—as similar measures have been seen in our history—as a jolly good way of subsidising employment, enabling companies to pay less because their staff will get more from the Government. However, it is the business of the House to know whether the concerns of many are justified and how the legislation will work out in practice.
	I repeat that we are glad that the Government have essentially accepted our argument. We think that extracting the evidence will not be easy. On cost, it was not clear until the Bill was in Committee that the tax credits would cost some £15 billion overall, as I recollect pointing out. The Government have now agreed that the figure will be £16 billion, which is not easily identifiable in their statistics. It was not clear until the Bill went to the other House that 90 per cent. of tax credits will be accounted for as Government expenditure paid as benefits and not treated as bogus deductions against tax revenues. We think it thoroughly healthy for the proper accounting principles of the Government that the objections of the Office for National Statistics should eventually have won the day.
	The Budget Red Book estimate for 2002 shows that tax credits will cost some £4.6 billion next year. That figure is based on a take-up assumption of 85 per cent. If the take-up were 100 per cent, tax credits would cost some £5.43 billion. It will be necessary to know, for reasons of cost as well as meeting the target of helping the needy, what take-up is expected and how much more or less than budgeted the measures will cost as a result of the actual take-up figures.
	It is important to know the total public expenditure on social security, including the 10 per cent. that will not be treated as expenditure. The figure for 2001–02 seems to be £110 billion—about 30 per cent. of total expenditure. That figure has increased in the past five years by more than spending on health or education and despite a massive and welcome fall in unemployment, and is expected to grow to £126.7 billion next year—an increase of £34.58 billion or 37 per cent. over the past seven years. That contrasts with increases of only £22 billion for education and £28 billion for health.

Rob Marris: Only £22 billion?

Howard Flight: I remind the House of the Government's commitment in 1997 that the additional spending on education and health would come from rationalisation and reforms of social security expenditure. It is important to note that in reality the reverse occurred: at a time of prosperity, spending in that sector has increased by more than spending on health or education.
	The crucial point is whether the money is reaching those in greatest need. The latest estimates on income-related benefits for 1999–2000 showed disappointing take-up figures, mainly for pensioners where the figure was between 74 and 78 per cent. by case load; 1.2 million pensioners had not received council tax benefits, while 580,000 had not received their income support and 150,000 had not received housing benefit. About £3 billion in benefits were unclaimed.
	The arrangements for the new tax credits are rather more complicated than the long-standing arrangements in the areas to which I have just referred. I beg to differ strongly with anyone who does not think that take-up data are important in a humanitarian sense.
	Our main concern is that the tax credits should address their key objectives—helping those in need. The report is about that and about not wasting money. In essence, the Government's version fine tunes the Opposition's proposals, but before I agree to it I should like the Paymaster General to confirm two points: first, that the reference to numbers will cover everything that I mentioned in respect of take-up; and, secondly, that, although it is sensible not to have annual estimates or guesses as to the cost to business, the Government will encourage the Revenue to indicate any evidence that costs to business are rising substantially as a result of administrative problems with the tax credits.

Steve Webb: I congratulate the hon. Member for Arundel and South Downs (Mr. Flight) on the breadth of his contribution, although I was slightly disappointed that he did not ride into battle on behalf of his noble Friends, instead seeming meekly to accept the Government's half-offering in the form of the amendment in lieu.
	We are being asked to consider two versions of an annual report to Parliament on tax credits. It is instructive to reflect on the fact that when the proposition was first put to the Government in another place, they felt that no annual report was necessary. The Government advised their lordships that Parliament was able to scrutinise such matters through parliamentary questions—we all know what an effective and lucid means they provide for obtaining information—or that perhaps the appearance, once a year, of the chairman of the Board of Inland Revenue before the Treasury Committee would enable us to acquire all those hard data. It strikes me, however, that the Treasury Committee might want to raise other issues with the chairman.
	I welcome the fact that, after their defeat in another place, the Government have conceded the principle of an annual report.

Dawn Primarolo: I am sure that the hon. Gentleman did not mean inadvertently to mislead the House. The annual report of the Inland Revenue is placed in written form before the House. It is not dependent on the attendance of the chairman of the Board of Inland Revenue before the Public Accounts Committee—the Committee to which he reports, as accounting officer. The report is already produced in written form and presented annually to the House. If the House decides that it wants to receive the report in another form and that it wants more bureaucracy—something that it normally does not want—the Government will provide it.

Steve Webb: The right hon. Lady is right; there is an annual written report. However, in another place, Lady Hollis referred to the written report and said:
	"the chairman of the Inland Revenue appears annually before the Public Accounts Committee so that the committee can more closely scrutinise the details of the annual report."—[Official Report, House of Lords, 12 June 2002; Vol. 636, c. 289.]
	If we want scrutiny of detailed aspects of tax credits, an annual response to a report that covers the whole range of the Inland Revenue's activities may not provide the necessary degree of detail.

Dawn Primarolo: I remind the hon. Gentleman that we have a very effective Select Committee system in the House, and the Treasury Committee calls me, as the responsible Minister, before it. I have just appeared before the Treasury Sub-Committee as part of its examination of that very annual report. There are checks on the accounting officer and on the Minister, and there is a printed form in the annual report, so there are three ways to check the information. Our amendment merely provides a fourth way for exactly the same information to come before the House. Quite rightly, Baroness Hollis pointed out that the House already had this information; but if hon. Members insist that they want more bureaucracy and a fourth way of expressing the same information, we are happy to provide for it in the amendment.

Steve Webb: I think I am right in saying that the amendment in lieu before us is a Government proposal to produce an annual report containing the information. Therefore it is the Government who are today offering to produce it. If the Government consider that that would be a waste of time and a duplication and would add nothing else, they should have stood against—[Interruption.] No, they should be standing against the Lords amendment today. They have decided not to, and essentially accept the principle of an annual report.

Dawn Primarolo: Let me get this right. The hon. Gentleman is saying that, when something is pressed on the Government that they do not believe to be necessary, but which Members of the House and the other place continue to insist they would like in a particular form, the Government should turn their face against those propositions and continue not to provide it. He is saying that, consequently, when a Minister comes to the House saying, "Even though we do not believe that this is necessary, we will do it anyway because that is what the Members of the House want," that Minister should be criticised. That is a bit crazy.

Steve Webb: The right hon. Lady told us that the information that her proposal would make available was unnecessary because it would be available in three other ways, but she proposes to ask the House to support its publication.
	We have before us two alternative proposals for different variants of the annual report, which the Minister considers to be unnecessary. There are two differences between the Lords and Commons versions of these annual reports and, as the hon. Member for Arundel and South Downs said, one relates to take-up and one relates to the burdens on business.
	If we accept the Government's version, we have sold the pass on take-up, because the Lords version refers in paragraph (d) to
	"an estimate of the take-up of the working tax credit"
	and in paragraph (c) to
	"an estimate of the take-up of the child tax credit".
	The word "take-up" can be used by different people to mean different things. Let me make it clear what we are talking about here.
	If the information published is an estimate, it must be an estimate of the proportion of those who are entitled to the credit who take it up. It cannot be statistics on the numbers who get it, because the Government know the precise number, so if it is an estimate, it must be information about rates of take-up—the proportion of the eligible population who claim the credit—which is very valuable information indeed. The Government have taken that out of the Commons version of the report. The Government's amendment in lieu simply refers to "the number of awards".
	I absolutely agree with the Minister on that point. The number of awards will be available trivially, all over the place. The value added of the Lords report would be an estimate of take-up rates, which are, as the hon. Member for Arundel and South Downs said, absolutely central to any means-tested or tax credit-based approach. It is a central issue: what proportion of the money available is claimed by those who need it, as compared with other routes. I am sure that the Minister's amendment in lieu takes out the requirement to give an annual report on tax credit take-up as part of the overall report, and that is a very important thing to keep in, because not enough work is done on giving the House up-to-date information on take-up.
	The hon. Member for Arundel and South Downs quoted take-up figures for 1999–2000—three years ago. The House should have much more up-to-date information on take-up, and if the Lords amendment requires that that information be provided annually, systematically and together with all the other information on tax credits, that amendment is preferable to the amendment that the Government have asked us to accept today.
	The second thing that is different about the two versions of the annual report concerns burdens on business. When I first read the ministerial response, I thought, "That's fair enough." An initial assessment on business would be undertaken, and then things would be left to run, so why would anyone want to keep picking away at the burdens on business each year? However, one reason why things might change would not be picked up by the initial regulatory impact assessment.
	The legislation on tax credits might not change, but the environment in which they are applied will change. For example, the balance between small and large firms changes over time, as does the minimum wage. Because of those changes, the effects of the tax credit regime on business will change over time. So it is no good saying, "We did an impact assessment when we passed the legislation a year or two ago and things will always be more or less the same until we change the primary legislation."
	The world in which the legislation operates is changing all the time. For example, one can imagine that a Government who substantially increased the minimum wage and floated large numbers of people off tax credits would substantially reduce the burden on business because far fewer people would claim the credits. However, if the minimum wage were allowed to drift below the wages of the low paid over a period, people would be drawn into tax credits and the burden on business would increase, but none of that would be captured in the initial regulatory impact assessment.
	Obviously, if nothing else changed, there would be no point in carrying out a reassessment every year for the sake of it—but the world is changing all the time. The measure's impact on business will change because unemployment and employment rates, working patterns and business patterns are all changing.

Roger Casale: The hon. Gentleman is right to be concerned about the costs to business of operating the working tax credit scheme, but does he think that it might be possible to assess the benefits to business of that scheme? What does he think those benefits might be?

Steve Webb: The hon. Gentleman may not recall this, but we voted for this legislation. We do not dispute the attractions of supporting the low paid. There is no difference between us on that. However, in all these things, there is a balance to be struck between the advantages to individuals and the burdens on business. In my view, delivering the tax credits through the pay packet creates a burden on business, with no advantage to the citizen, so updating information on the burden on business each year will help us to make the case that such things should be done differently. It would help us to keep an eye on the problem inherent in the scheme that has been adopted.
	I shall not detain the House any longer. There are two differences between the Lords version of the report and the Commons version. The Lords version is superior because take-up and other information would be provided every year and because it would provide an up-to-date picture of the burden on business, which will change over time. For those reasons, we are disinclined to disagree with the Lords in the said amendment, and we hope to find out in due course whether the House agrees with us.

Hywel Williams: I, too, am glad that the Government have given ground on the annual report issue, despite the arguments against taking the step proposed on their behalf in the other place by Baroness Hollis. Hon. Members will perhaps have noted that Baroness Hollis argued that the various statistics were available from a variety of sources and all that the curious needed to do was track them down. That may be so, but that does not detract from the value of publishing all the statistics annually and in a form that is easily accessible not only to hon. Members but to the public, in the fine tradition of open government.
	Baroness Hollis also said that she was against what would be a cut-and-paste exercise, so I am glad that, despite her persuasions, we will now have an annual report. I am sure that the Government are poised, even now, with the scissors and glue. I congratulate the Government on changing their mind, and look forward to the result.
	However, unlike the Lords amendment, under the Government amendment in lieu, the report would note only the number of child tax credit and working tax credit awards and the number of inquiries, penalties, prosecutions and convictions. It will not contain an estimate of the take-up rates. The Lords amendment would require
	"(b) an estimate of the take-up of the working tax credit;
	"(c) an estimate of the take-up of the child tax credit".
	I am sure that the Government are always pleased to report positive figures to the House, such as the number of awards made. They are always pleased to report how often they have hit a particular barn door. In itself, that is interesting; it might lead to favourable headlines of the variety that say, "Barn door targeting—another Government success!" However, I am sure that that consideration could not be further from the Government's mind. Of equal interest is not only how often the Government have hit the barn door, but how often they have missed it. Indeed, such a comparison is essential for any serious assessment of the success or otherwise of the tax credit system.
	The statistics are available on take-up, or they can be worked out. The noble Baroness noted that
	"in the first year, take-up of WFTC . . . was 76 per cent—which is close to the 81 per cent for family credit".—[Official Report, House of Lords, 12 June 2002; Vol. 636, c. 291–2.]
	I do not regard a difference of 5 per cent. as close, although, in terms of barn doors, I suppose that it might be.
	The Government are, of course, reticent in talking about take-up rates, for good, if not laudable, reasons. Those who have a right to means-tested benefits but who do not claim them are a continuing demonstration of the inefficiency of means-tested benefits as a way of relieving poverty. Given the higher proportion of people in Scotland and Wales who are dependent on those means-tested benefits, drawing attention away from the deficiencies of the system is not a politically neutral step. Apart from our interest in promoting open government, that was one more reason why Plaid Cymru and the Scottish National party were very much in favour of the Lords amendment and why we are disappointed with this Government revision.

James Clappison: With the leave of the House, I shall intervene briefly—as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) suggested I would—on the subject of fraud, which has been of some interest to me and other Members during the passage of the Bill.
	I congratulate the Paymaster General on the eloquence of her opening remarks, and the elegance with which she executed a strategic retreat from the position of the noble Baroness Hollis, who told the House of Lords that the amendment was wholly unnecessary, and that it amounted to a scissors-and-paste job. If I may say so, the right hon. Lady has carried out a scissors-and-paste job today with our hardly noticing. After my initial admiration for her elegance, however, I began to feel a sense of unease about the way in which she responded to the points made by my hon. Friend the Member for Arundel and South Downs and other hon. Members on eligibility as part of the information required to assess take-up, and on the question of burdens on business.
	If one looks at the difference between the Lords amendment and the Government amendment, whether subsection (1) or subsection (2), it strikes one immediately that the Government have changed the wording from "estimate" to "number" and that the question of business costs is left out altogether. I feel a slight sense of concern about what the Paymaster General said about a figure for business costs being available later and being revised. First, in the regulatory impact assessment, the Government conceded that the impact of some of the proposed legislation could only be estimated once the system is up and running, and that there may be an additional cost to businesses as a result of the need to respond to in-year changes in recipients' circumstances.
	Secondly, if the right hon. Lady is right in her statement that it is inappropriate to include business costs in the annual report, and she is right that the cost will be fixed, what are the Government afraid of? Why are they shy about including that as part of the annual report? They will be able to say, "Look here, we were right. There was only this fixed cost for business. It isn't changing each year. The amount isn't increasing." Whether the arguments of the hon. Member for Northavon (Mr. Webb) are right or wrong, the Government will be able to say that there is not an increased cost to business every year. What would be the harm of including that in the annual report? Many businesses, especially small businesses, will feel some small sense of unease that that has been left out of the annual report.
	On fraud, an important question arises from the Lords amendment. The right hon. Lady will recollect that concern has been expressed in many quarters. My hon. Friend the Member for Arundel and South Downs was absolutely right to talk about fraud and misdirection of public money in tax credits. He quoted the right hon. Member for Birkenhead (Mr. Field), who is in a good position to judge given his previous experience in the Department of Social Security, and whose contribution on Second Reading we all recollect. He said that
	"some people in Whitehall are less keen on countering fraud than hon. Members."—[Official Report, 10 December 2001; Vol. 376, c. 617.]
	I know that Members on both sides of the House are concerned about fraud and Conservative Members are certainly keen to bear down on it. We recognise that fraud is a misuse of public funds and we recognise the affront that it causes to hard-working taxpayers and claimants alike.
	The vast majority of those in receipt of tax credits are, of course, decent and honest people who properly claim what they are entitled to and, when we talk about fraud, we are not talking about those who simply make a mistake and thereby receive more than their entitlement. The Paymaster General will recall that, throughout our proceedings, we have been at pains to draw a distinction between those who commit fraud and those who make a mistake. We have tried to argue that the Government should not bundle the two groups together. However, members of the public want those who set out to cheat the system and who sometimes obtain substantial sums of money to be brought to justice.
	Under the amendment in lieu, the annual report will give details of the number of prosecutions and convictions for offences connected with tax credits. Members of the other place were right to press for that information to be made available in the annual report because, thus far, the record of prosecutions for tax credit fraud has been feeble. In the first two years of the working families tax credit, there were 22 prosecutions for false working families tax credit applications. That is for the whole two-year period up to September 2001, the first two years of the working families tax credit.
	It is true that a little more vigour has been shown since then. In the six-month period since September 2001, 26 prosecutions were instigated for fraud, according to a written parliamentary answer that I received on 1 May this year. However, even if there has been that slight increase in the past six months, on any view of the potential scale of fraud in tax credit, it remains a low number of prosecutions. We note that there have been no prosecutions at all for fraud in the child care element of the tax credit, but stories abound of what members of the public regard as irregular practices in that area.
	In a written answer, I was told:
	"As at 31 December 2001, there were a total of 542 Inland Revenue staff involved in investigating possible false applications for tax credits. The figure comprises 27 Investigators and 226 support staff employed centrally at the Tax Credit Office. There are a further 247 Inland Revenue Network staff who also deal with tax credit investigations, and a specialist team of 42 staff dealing with the most serious cases including those resulting in prosecution."—[Official Report, 19 December 2001; Vol. 377, c. 326W.]
	All those staff for the annualised equivalent, on the latest figures, of 52 prosecutions a year! According to my simple maths, that means we employ 542 staff for 52 prosecutions, so there are 10 man-years for each prosecution that is brought by the Inland Revenue.

Dawn Primarolo: The hon. Gentleman said that stories and allegations of fraud abound. Is he suggesting that the Inland Revenue does not investigate those allegations or that the investigations do not come to fruition in terms of prosecutions?

James Clappison: I remind the right hon. Lady of what I said. I pointed out the number of staff
	"involved in investigating possible false applications for tax credits."
	I hope that she is not suggesting that the record of prosecutions is anything other than feeble. She has also conceded in written parliamentary answers that there have been no prosecutions whatever in cases involving child care. Even if one takes into account the number of investigations and the number of penalties—they run into a few hundreds—the performance is less than spectacular.
	Prosecutions and the threat of imprisonment have the greatest deterrent effect, or so the Government would have us believe with their television advertising campaign. The right hon. Lady looks quizzical, but their campaign shows a benefit cheat languishing in a prison cell. When it comes to the facts, the truth is rather different.

Dawn Primarolo: rose—

James Clappison: I will give way to right hon. Lady, but she may want to comment on the fact that in the first two years of tax credits only seven people have been sent to prison for fraud.

Dawn Primarolo: Is the hon. Gentleman suggesting that allegations should not be investigated and proven before a prosecution on fraud takes place? I am a little confused. The hon. Gentleman talks about allegations and the number of investigating staff. Has it crossed his mind that sometimes allegations are made but not proven?

James Clappison: The right hon. Lady is a little confused about the role of the prosecution in the criminal justice system. It is not the role of the prosecutor to prove the offence—

Dawn Primarolo: The role is to get the evidence.

James Clappison: It is the role of the prosecution to get the evidence—[Interruption.] Of course they carry out an investigation. They then make a decision based on whether there is sufficient evidence to prosecute, to which they apply the public interest tests, before taking the case to court. Is the right hon. Lady trying to persuade us that the 26 prosecutions in six months or the 22 prosecutions in the previous two years are representative of the scale of fraud in tax credits? I will give way to her if she is prepared to defend that.

Dawn Primarolo: Is the hon. Gentleman suggesting that the Inland Revenue should take cases to court without evidence to support the allegation that fraud has been committed? Is that the centre of his argument?

James Clappison: No, the centre of my argument is that the Inland Revenue's record of prosecuting fraud under this Government's policies is feeble to have brought such a small number of cases to court. That amount of fraud beggars belief.
	The right hon. Lady will be familiar with the estimates by the Department for Work and Pensions on the extent of fraud within the rest of the benefits system. It estimates that total fraud varies from £2 billion to £7 billion. Some 12,000 prosecutions are brought each year, but when the Labour party was in opposition it said that that was inadequate. The right hon. Lady's Government have brought only 26 prosecutions in the past six months and 22 prosecutions in the previous two years. That hardly bears out the gist of the Government's advertising campaign.

Mark Hendrick: How many cases were investigated and what percentage were found to be fraudulent?

James Clappison: We have obtained a massive amount of statistics on that which the hon. Gentleman can find in the responses to written parliamentary questions. The fact of the matter is—[Interruption.] The hon. Gentleman will find those if he looks at the written answers for the relevant periods. I do not have the figures in front of me, but I can tell him that the number of prosecutions in relation to the extent of possible fraud is very low. I do not know whether the right hon. Lady is defending that, but however one looks at it, the number is very low.

Dawn Primarolo: I hate to spoil the hon. Gentleman's speech, which he obviously prepared before he read the Government's amendment, but has he noticed that our amendment goes further on fraud than the Lords amendment by making it necessary to provide more information on such matters? If he is arguing against the Government's amendment in favour of the Lords amendment, he should realise that the other place asked for less information to be provided than we will give to the House on penalties, prosecutions and other matters.

James Clappison: If the right hon. Lady will exercise a little patience, I will come to that. In the spirit of being open about information and given her remarks about the extent of fraud, perhaps she will tell us something else so that we can make a judgment on the information requested in the amendments. The extent of take-up can only be judged when we compare the number of people who take up the benefit with the number who are eligible. The right hon. Lady is defending the number of prosecutions, and her hon. Friends joined her in that. Perhaps she will be as bold as her words in defence of the Government's policy by telling us one thing: how much fraud is there? So far, the right hon. Lady has refused to tell us. She will remember that she wrote to me in April 2001, telling me that the Inland Revenue was conducting a benchmarking exercise to establish the level of fraud in tax credit claims, and that that would run from September 2000 for 12 months. At the end of that 12 months—we shall see whether the right hon. Lady's openness will be forthcoming again—I asked the question again. That was in December. She told me that the results would be known "early next year".
	That was earlier this year, and we had the opportunity to ask the right hon. Lady about these matters when we were considering the Bill in Committee. When I asked her again about the extent of the fraud and the outcome of the benchmarking exercise—[Interruption.] This is of interest to the hon. Member for Preston (Mr. Hendrick), because this is the answer to his question. The right hon. Lady told me:
	"I cannot give him a guarantee that I will be able to publish that information because it deals with specifics of possible frauds that it would be unwise to put in the public domain. However, I will consider how to ensure that he is properly informed so that he can discharge his parliamentary duties."—[Official Report, Standing Committee A, 24 January 2002; c. 239.]
	That was me.
	I did not hold my breath when I received that reply from the right hon. Lady. It says something about the Government's mentality that they presume that they are the judge of what information can be given to the Opposition and to other hon. Members. I suspect that I was right not to hold my breath because when I raised the question again after a reasonable interval in April 2002, I was referred back to an earlier answer in February 2002, which told me:
	"The Inland Revenue are currently analysing the data from their compliance benchmarking exercise. We shall be considering the results, and questions of publications, within the next few months."—[Official Report, 5 February 2002; Vol. 379, c. 851W.]
	We are talking about a report that Ministers have had since September 2001. We have asked repeatedly for information, and months have elapsed. In response to our questions, we have had one blocking answer after another. We have been referred back to previous answers. The right hon. Lady had much to say earlier when I was asking about numbers of prosecutions, and suggesting that there were not very many. Perhaps she will now be as brave as her words and tell us whether the Government will publish their own report—Ministers have had it in their hands since September 2001, at least—and state how much fraud there is within the working families tax credit mechanism. Will the Government publish the results of their own benchmarking exercise?
	We simply want to obtain this information. We will be able to judge both sets of amendments when we know how much fraud there is. We shall then know whether the numbers of prosecutions and convictions are an adequate reflection of the level of fraud. Once again, I am waiting with bated breath. I hope that I will not again have to use the procedure of parliamentary questions, because we know how effective that is when the Government are determined to withhold something. My sad experience is that that has been the case so far in this instance. Will the Government tell us how much fraud there is in the working families tax credit mechanism. I ask for a straightforward answer to a straightforward question.

Roger Casale: I wish to speak in support of the Government amendment in lieu and in support of the motion to disagree with the Lords amendment.
	There is much common ground between what the Government are proposing and the Lord's amendment. I welcome the Government's decision to publish an annual report. I am sure that there will be a great deal of interest in the report from both sides of the House—given the level of support for the tax credits system—and in the way in which it operates in practice.
	We have heard that there is common ground on the issue of tackling fraud. The Government's amendment goes much further than the amendment from another place in terms of a commitment to report on the steps that they are taking to tackle fraud. That is despite the huff and puff that we have heard from the hon. Member for Hertsmere (Mr. Clappison).
	There is also common ground on reporting on the take-up of tax credits. Again, the commitment that the Government make to that in their amendment is much stronger than that in the Lord's amendment.

Howard Flight: The hon. Gentleman has just said something that may be important or may not be quite right. I await the Minister's response. All we know is that the Government will publish a report on numbers. We do not know what the commitment is under the Government's measures to report on take-up. If the hon. Gentleman can tell us, we would be delighted to hear.

Roger Casale: I draw the hon. Gentleman's attention to the text of the Government amendment, which refers to the number of awards, the number of inquiries conducted and the number of penalties imposed by the scheme. The Government have got the balance right in terms of the focus of the annual report. They are right to reject the suggestion that there should be an annual assessment, in addition to the regulatory impact assessment that will have been made, of the cost of the scheme to business.
	It is interesting that in the other place it was Lord Saatchi who drew attention to the cost to business of the working of the tax credit schemes. During the debate in the other place, he explained why he was asking for an assessment of that cost as part of the report. He said:
	"Why do we ask for this? Because we believe that such a responsibility being placed on the Treasury will have the healthy effect of focusing the Treasury's attention"—
	and, presumably, everyone else's—
	"on the cost of the Bill to small business."—[Official Report, House of Lords, 16 May 2002; Vol. 635, c. CWH 31.]
	It is rather ironic that in moving the amendment in the name of cutting red tape on business, Lord Saatchi seems to want to do so by imposing a greater burden of red tape on the Inland Revenue—it would be onerous to run regulatory impact assessments every year. I am not saying that we should not be aware of the impact on business and seek to ameliorate that, but we must set the costs that there may be to business against the real benefits to business of increasing the number of people who are in work and participating in the labour market through the operation of the scheme.
	Of course, it was Lord Saatchi who, 20 years ago, drew everyone's attention to the costs of "Labour's not working," as he put it then. It seems ironic that he is now drawing everyone's attention to the costs when Labour is working. We have more than 1 million more people in work as a result of labour market interventions such as the tax credit scheme.
	It is all very well for the official Opposition and the Liberal Democrats to say that they support the tax credits, but if the tax credit schemes are to have their full beneficial effect in practice, it is important that they have the full support of the business community in their implementation. By drawing attention the whole time to the cost to business of operating the tax credit scheme, rather than taking a more balanced approach which emphasises the great benefits to business, especially if there is a high take-up of the scheme, the Opposition get the balance wrong.
	In responding to the wishes of hon. Members in all parts of the House for the tax credit scheme to be effective, for a way of benchmarking that from year to year, and so for an annual report, the Government have got the balance right in their amendment. If the Opposition intend to support the scheme, they should stop carping about the form of the annual report and support the Government's amendment.

Dawn Primarolo: With the leave of the House, I shall respond to the three major points that have been made in the debate this afternoon, although I get the feeling that it does not matter what I say in my concluding remarks; the Opposition have already made up their mind that they will vote against the Government regardless.
	The three points refer, first, to the cost to employers; secondly, to take-up; and thirdly, to fraud and the enforcement of the compliance system to reduce the level of fraud. I shall deal briefly with each point, starting with the cost to employers. As I said earlier, it is not for the Government to assess and account for employers' costs. However, it is for the Government—and it is we who introduced the process—to monitor and evaluate the introduction of measures that may impact on employers' costs, as the regulatory impact assessment does in relation to the regulations required under the Bill.
	Two further issues were raised. First, the hon. Member for Northavon (Mr. Webb) accepted my argument that, if the regulations were set, they would not change. He also said, however, that the Government would do other things that might impact on employers and that the situation had to be seen in the round. The Lords amendment did not ask us to deal with such matters—it asked only for an annual report on the Bill—so even if he votes against the Government and in favour of the amendment, he will not get the assessment for which he has called on the Floor of the House. As the Government are committed to regulatory impact assessments, an evaluation is conducted of every measure's impact on employers and presented to the House.
	I would also go further—the hon. Member for Northavon is aware that the same issue has arisen in previous debates on the working families tax credit, the disabled person's tax credit and the new tax credits—and say that the Government have worked very closely with business on the design and development of the systems. The consultative group has given an enormous amount of time, for which the Government are grateful, to ensuring that we properly take forward the work. That group will continue to have the ability to monitor and consider the situation should any changes occur that might impact on business. It will then be for the Government to bring the matter to the House. We take the view that the suggestion that we must conduct an annual report on regulations that will not change, costs that will not vary and an impact on business that is not yet accounted for is a waste of time, as such a report would produce information that would take the House no further forward.
	The hon. Member for Arundel and South Downs (Mr. Flight) demonstrated that he still did not quite grasp what employers are being asked to do. In particular, he said that employers would be asked to supply a lot of information about hours. Precisely because of the way in which the new tax credits are structured, however, people will claim on the basis of information that the Revenue already has. Furthermore, the end-of-year checks will not routinely involve employers, so even his suggestion that the checking system will cause extra work is incorrect. The idea that we should conduct an annual report on something that is not happening is somewhat bizarre.
	I turn now to the question of fraud and tax credits. The irony is that the Government, having listened closely to debates in this House as well as the other place, tabled an amendment that goes further than their lordships requested in their amendment. The Inland Revenue system does not operate only on the basis of prosecutions; the position is fundamentally different in relation to the Department for Work and Pensions. We also impose penalties, as we have a process that graduates through the system. The original Lords amendment asked for details on the number of investigations, prosecutions and convictions. The Government amendment requires the inclusion of both sets of information in the annual report. In addition, it requires that the report set out details of the number of penalties imposed under the Bill. That is an area on which hon. Members concentrated when we discussed the matter on the Floor of the House and in Committee.
	On the first two points, hon. Members are asking for information as regards employers for which the Lords amendment does not provide, yet claim that that amendment is better. On the second amendment, about fraud and compliance with the system, the Government listened not only to their lordships but to this House, and tabled an amendment that goes further. We have also dealt with the issue of take-up.

James Clappison: I am afraid that the Paymaster General is doing it again—she is bracketing fraud and non-compliance together. Does she appreciate that it is fraud that really angers members of the public, and will she now tell us how much fraud was involved in the working families tax credit?

Dawn Primarolo: I was hoping to save the House the explanation of the difference between how the Inland Revenue operates what it calls its non-compliance regime and how the Department for Work and Pensions conducts its regime for prosecutions. I fear that I will now have to give that explanation, because although the hon. Gentleman has repeatedly had the matter explained to him, he has not grasped it.
	It is true—I think that the hon. Member for Northavon would entirely support this proposition—that the Government want to ensure that all those who are entitled to the new tax credits claim them. Of course, there is no reason not to tackle fraud where it arises, but the development of the regime must not have a negative impact in frightening or discouraging people from applying for their rights.
	The Inland Revenue has a long history of dealing with non-compliance. Since 1999, that has been extended to dealing with tax credit claimants in order to ensure that tax credit claims are subject to a suitable compliance strategy. That experience, together with that obtained by the Department for Work and Pensions in operating the benefits system, has led to the development of a robust new compliance regime for the tax credit systems. That will make full use of automated systems and data sources used by the Inland Revenue to counter non-compliance. If we can prevent people from committing the fraud in the first place, we will not need to prosecute them because it has been picked up at an early stage.
	The Inland Revenue can use penalties as forms of prosecution. We should consider the improvements that have been made. The Bill, like the previous tax credits provisions, contains structural improvements that should help further to reduce fraud. First, there is a move away from payment by the order book to payment directly into the bank account. Misuse of the order book is a well known and extensive area of fraud. Secondly, one of the biggest areas of fraud is understated earnings, which the Inland Revenue has long experience in tackling. Moreover, the measure of income for the tax credits will be aligned much more closely with those that are used for tax. Along with links between different Inland Revenue systems, that will make it much harder for claimants to hide sources of income.
	The Bill goes further. It provides new powers to tackle fraud effectively, including powers to charge penalties and to provide the Revenue with the necessary power to obtain information, to check claims and to carry out inquiries where fraud is suspected. It allows for a co-ordinated approach of investigating tax and tax credit non-compliance. It includes new powers to investigate criminal fraud when necessary. It creates a new criminal offence of tax credit fraud and provides for powers that will allow the Revenue to recover overpayments. That contrasts with the system in the Department for Work and Pensions, which the hon. Member for Hertsmere (Mr. Clappison) keeps mentioning.
	Compliance activity in the Department for Work and Pensions traditionally depends more on prosecutions, and contrasts with the Inland Revenue's approach of a compliance regime that reinforces at every point that the application is correct. The Inland Revenue's approach to tax credit fraud is consistent with its approach to other sorts of fraud. So the points made by hon. Member for Hertsmere are simply not valid.

James Clappison: The Paymaster General has been generous in giving way, but I want to press her on the matter. Whatever one's view about dealing with the matter as fraud or non-compliance, surely she agrees that it is important to know the amount of fraud. She wrote me a letter, which stated:
	"The Inland Revenue are carrying out a benchmarking exercise to establish the level of fraud in tax credit claims."
	Will she tell us the amount of fraud and publish the report?

Dawn Primarolo: That is precisely what the Government new clause will do annually. Where has the hon. Gentleman been? It will provide annual information to the House on penalties, prosecutions and convictions.
	Let me consider take-up. It is argued that the Government should somehow put in place estimates of take-up. I am surprised at the hon. Member for Northavon, who is well versed in the various surveys that are conducted and on which the Government draw. He also well knows that there is a gap between the studies being conducted and publication of the evidence. He knows that the studies do not always cover points that may now be relevant and need to be asked in the context of tax credits.
	Estimating take-up rates is not as straightforward as hon. Members suggest. The purpose of an annual report is to provide the House with meaningful and structured information so that it can assess the impact of the tax credits. The matter is not straightforward because the take-up rate is calculated by dividing the number of awards by an eligible population. Survey data are used to estimate the number of eligible non-recipients. There is a time lag between conducting the survey and publishing the data. For example, the family resource survey for 2000–01 was published earlier this year. Eligibility tests, not only on household income but on hours worked, makes estimating the eligible population, especially those without children, far more complex.
	Take-up was discussed when I appeared before the Treasury Sub-Committee. I explained the difficulty with the surveys on which we depend. I also explained that the Inland Revenue was in discussion with the bodies responsible for conducting the surveys to ensure that they included relevant questions for gleaning the information that would provide a more accurate measure of eligibility. We do not currently have that information. Producing an annual report now, when the information is unavailable and unreliable, would be a waste of Parliament's time and would not give us a true picture.
	We have tried to be helpful; we have listened to the debate here and in another place, and we have tabled a better new clause. Despite the force of the argument, some people prefer to vote against the Government for the sake of doing so.

Question put, That this House disagrees with the Lords in the said amendment:—
	The House divided: Ayes 296, Noes 188.

Question accordingly agreed to.
	Lords amendment disagreed to.
	Government amendment in lieu of Lords amendment No. 1 agreed to.

Clause 3
	 — 
	Claims

Lords amendment: No. 2.

Dawn Primarolo: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we may discuss Lords amendments Nos. 3 to 6, 12, 18 to 23, 33, 34, 37 to 40, 42, 45, 47, 49, 50, 52 to 64, 66, 72, 73, 75 to 78, 80, 81, 85, 86, 88, 91, 93, 99, 106, 108 to 113, 115, 118, 121 and 124.

Dawn Primarolo: The debates that we will have as we proceed through the remainder of our considerations today will be on technical and drafting amendments that the Government believe will improve the Bill by clarifying and rationalising its provisions. I shall briefly introduce the purpose of each group, and many of the amendments are consequential.
	This group of amendments deals with the interaction between awards and entitlement, and includes technical changes to the provisions on recovering overpayments and paying out underpayments when entitlement turns out to be different from the amount paid under an award during the year. In addition, it makes clear that awards are not revoked by a decision of the board, but are instead terminated by such a decision.
	I shall briefly explain why these technical changes are necessary. The new tax credits introduced by the Bill are designed to target support according to the current circumstances of claimants within the context of a system that bases entitlement to tax credits on annual income and can respond by adjusting support if claimants experience a change in their level of income.
	As the credits are designed to ensure support is delivered to claimants during the year, the Bill enables the Inland Revenue to make awards, and payments under those awards, during the year, and to adjust those awards and payments as claimants' circumstances change. That is precisely what we intended.
	However, there were some technical problems—as there often are—with the relevant provisions in the Bill as it stood. The amendments do not change the basic operation of the Bill. Awards and payments under those awards are the vehicle for delivering support during the year. Entitlement is different. I am sorry that we need to be so precise, but legislation needs to be precise in these circumstances. Entitlement depends on the underlying facts, some of which cannot be determined until after the end of the year. However, that distinction was not clearly drawn in the Bill as it stood, so we decided that a number of technical changes were necessary to clarify matters.
	The key changes are the amendments to clauses 3 and 5. A considerable number of purely consequential amendments to later clauses were also necessary. That accounts for the bulk of the amendments in this group.
	In addition, the Bill was unclear about the effect of income on awards and entitlement. As the new tax credits will respond to changes in income, entitlement cannot finally be determined until after the end of the year, when current year income is known. As the Bill stood, however, the lack of a clear distinction between awards and entitlement meant that claimants could face having their entitlement curtailed because of decisions taken by the board during the year based on expectations about income.
	If the board decided not to make an award at all, in the expectation that a claimant's income would be too high for entitlement to any tax credits, that could cut across the claimant's entitlement. Awards will of course be finalised at the end of the year, once all the relevant details about income are known; but if no award was ever made there would be nothing to finalise. Someone might be entitled to receive money, albeit perhaps not very much, when his or her final income was determined according to the facts but the submission of expected income over the rest of the year had suggested no entitlement. To avoid that problem, amendments to clause 14 will allow the board to make awards at a nil rate.
	The idea of someone receiving a notice telling them that their award is nil may strike some people as bizarre. However, the reason for that is that at the end of the year the assessment of entitlement against award allows for action if it is indicated that money is outstanding.
	The group of amendments also contains minor drafting changes, the main change being replacement of references to the board's revoking awards with references to its terminating them. Once made, an award cannot simply disappear, which is what the reference to revoking awards might be taken to imply. If the award disappeared, it would not be possible to decide on the entitlement at the end of the year.
	Provisions relating to both overpayments and underpayments are amended. That enables the board to recover overpayments before the end of the year when the person to whom the award was made never met the basic qualifying criteria for the tax credit, and also makes clear that the board is obliged to pay any extra tax credits to claimants when there have been underpayments. It was always clear in Committee that the Government intended to make such provision, but I was told that the technical definitions should be made clearer.
	I am sorry that there are so many technical changes, but it was necessary to change every reference throughout the Bill to ensure that there could be no dispute about claimants' entitlements.

Howard Flight: We support these technical amendments, which, along with others, correct drafting errors.
	The many amendments tabled in the other place were, I think, largely tabled at the last minute. They seem to have been grouped into nine categories here, whereas there were five in the Lords. Essentially, however, they reflect a drafting muddle that occurred when the Bill went there—a muddle concerning both the definitions and the operation of awards and entitlements.
	Lord Higgins, who contributed a great deal to sorting out the problem, was strongly vexed. He said it would be "far more appropriate" to describe the amendments as structuring amendments, because there were
	"fundamental inconsistencies . . . between the earlier and later parts of the Bill."
	He said the Bill was "fundamentally flawed", and added
	"Rarely in almost 40 years in both Houses have I seen such a badly drafted Bill—in fact I probably never have."—[Official Report, House of Lords, 12 June 2002; Vol. 636, c. 266.]
	I must confess that it took me a long time and a lot of digging to establish the essence of the structural errors. I must also confess that in Committee I focused on the related territory rather than on specific drafting issues. The Revenue is being expected to make awards during the year, not necessarily based on adequate evidence, to check entitlement in terms of meeting all the qualifications and criteria at the end of the year, and then to recover overpayments.
	I think that the mechanism remains questionable and potentially flawed. I remember making the crucial point that unless claimants completed the tax credit equivalent of a tax return at the end of the year, I could not see how the poor devils in the Revenue could easily obtain all the information they needed to confirm that the provisional awards they had made would be correct in terms of legal entitlement.
	Let us consider the technical issues. The credits are designed to ensure that support is delivered to claimants during the year. The Bill enables the Revenue to make awards—and payments according to those awards—during the year, and to adjust the awards and payments as claimants' circumstances change and are confirmed. But because the credits will also respond to changes in income, entitlement cannot be finally determined until the end of the tax year when current-year income is known.
	Awards, and any payments made according to them, are simply a vehicle for the delivery of support during the year. Entitlement, however, depends on the underlying facts, some of which—those relating to income—will not be determined until the end of the year. That distinction was not originally clear in the Bill, and gave rise to some technical problems.
	In particular, there was a contradiction between clause 5 and the decision-making provisions in clauses 14 to 16. What were then subsections (3) and (5) of clause 5 were intended to make provision regarding claimants' entitlements. When people cease to meet the basic requirements necessary for qualification for one of the credits, it is sensible for their entitlement to stop. That was the aim of clause 5(5).
	As couples will be jointly entitled to the new credits, it is axiomatic that the entitlement of a couple—as a couple—should stop if the partners break up. Similarly, the entitlement of a single person as an individual will stop if that person takes on a new partner. That was the aim of clause 5(3). The provisions in clause 5, however, were cast in terms of the effect on awards rather than entitlement. They implied that awards would or would not end in particular circumstances. Clauses 14 to 16 make it clear that the existence of awards depends on decisions made by the board. Thus there was a conflict. The Bill as it stood left unresolved the question of what would happen in a case in which an award ought to end under clause 5, but the board had made no decision to end it under clause 16—or vice versa.
	These, then, are technical amendments intended to correct the misdrafting. Clause 5, in particular, now makes clear that awards run until the end of the tax year, and end during the year only if terminated by a decision of the board.
	I could bang on about the technicalities, but I think I have put on record what the technical issue was. The amendments relating to awards, entitlements, overpayments and underpayments are the key ones, although I believe that four other groups relate to those matters as well.

Steve Webb: It may reassure the House and you, Mr. Deputy Speaker, to learn that I shall not try to catch your eye on any further group of amendments, unless goaded. The amendments relate to overpayments and underpayments and other technical issues, and one practical issue arises.
	It would be helpful if the Minister would say how the system, which will come into operation in April 2003, will work in the following example of a typical person. We were told in Committee that the tax credits are modelled on the tax system and that they will bring benefits and taxes closer together. The tax liability for 2003–04 is based on income in 2003–04. My understanding is that eventually entitlement to tax credits for 2003–04 will be based on outturn income in 2003–04, which will obviously be known for sure only at the end of 2003–04.
	What is the position of someone who makes a fresh claim in March 2003? I have a constituent who has had a letter from the Inland Revenue to tell her to hold on to her P60 for 2001–02. I have written to the Minister on this issue. My constituent is very concerned, because her income has fallen since 2001–02. She is worried that she might make a claim in March 2003, hand in her P60 for 2001–02, and be told by the Revenue that she had a high income and will not get much tax credit. The relevant adjustments would not be made until the end of 2003–04, when her income could be determined definitively. For someone who makes a claim in March 2003, the assessment of income should be based on a best guess for income for 2002–03, not on outturn income for 2001–02, which will be two years out of date by then.

Dawn Primarolo: When the system starts up in April 2003, we will not have P60s available for 2002–03. Therefore we will start, effectively, at P-1, so we will use the base year of 2001–02. In the circumstances the hon. Gentleman describes, when someone's income has fallen in 2002–03, we might move to current-year income. We would consider the actual income at that time. I am grateful that the hon. Gentleman has written to me, because I wish to consider his point, but that is my understanding of the situation. In the first year, we have to use P-1, which will be 2001–02 and that should suffice, except in the circumstances that the hon. Gentleman describes of someone experiencing a fall in income.

Steve Webb: I am grateful to the Paymaster General for that constructive response, but unfortunately it raises several concerns. First, my constituent rang the WFTC helpline, but the staff did not have a clue about the system that will start in April. Many people will want to know how it will work, and I would be grateful for confirmation that the staff will start to give prospective advice on how the new system will work as soon as possible.
	Secondly, when I have received the Paymaster General's reply, I will write to my constituent and advise her to point out to the Inland Revenue when she makes her claim that her income has fallen and that she wants to be judged not on the previous year's income but on the present year's. My constituent will know what to do, because she has talked to me, but many people will not. They will be asked for the previous year's P60, but if their income has dropped they will be underpaid for up to 18 months.
	Thirdly, I do not understand why we will not always have that problem. In March 2004, we will not have P60s for 2003–04, so we will have to use P60s for 2002–03 for assessments for 2004–05, unless three months into every tax year, when the P60s are published, all assessments are revisited in one go.

Dawn Primarolo: I congratulate the hon. Gentleman's constituent on being ahead of the game in applying for something that the House has not yet decided will be available to be applied for. It is difficult for a helpline to advise on something that has not yet been agreed by the House. None the less, I apologise if his constituent has not received the advice that she should have received.
	On the hon. Gentleman's second point, I agree that, once the House has agreed the new system, it is important that we start training programmes and put the helpline in place. I will certainly pay particular attention to that.
	On the third point, the Bill allows for assessments to be made on a combination of previous year and current year. In Committee, we discussed the timing of the changeover of the rates so that it was in place with the issuing of the P60s. Although the claim is made from April, an increased payment might start a little later. That will even out the system. I realise that my intervention is too long, and I do not wish to try your patience, Mr. Deputy Speaker, so I will write to the hon. Gentleman on those points. If he agrees, I will send a copy to the hon. Member for Arundel and South Downs (Mr. Flight), because I am sure that he is interested in the same points.

Steve Webb: The system will be introduced in nine months. My constituent has taken or is considering taking—I forget the exact circumstances—another job that will mean a drop in income. She is looking ahead and wondering whether she can take the job. She has rung up for advice on a system that Ministers have said will be available next April, so it is a little harsh to criticise her. It is not unreasonable to ring a helpline for advice on a system that Ministers have repeatedly mentioned and that will be in place next April.
	Given that P60s are provided to everyone a couple of months into the new financial year and that, presumably, most people will need some adjustment to their rates—because of overtime or whatever—will we routinely see millions of adjustments to tax credit awards in, say, June every year? Some will be overpayments and some will be cuts, so what certainty will people have that the money they start getting in April—presumably a continuation of the previous year's money—will continue?
	I also wonder about the culture of the changes. We have been told that tax credits are supposed to be like income tax, but everybody's rates might change in June, whereas income tax rates apply for the year from April—although I appreciate that allowances have been changed mid-year in the past.

Dawn Primarolo: I certainly did not criticise the hon. Gentleman's constituent. In fact, I congratulated her on her forward thinking. In April 2002, the Inland Revenue published a document entitled "The Child and Working Tax Credits: The Modernisation of Britain's Tax and Benefit System, Number 10". Paragraph 4.5 on page 19 deals with how we would adjust the credit and the calculation. As we ran on past the beginning of the tax year, we would have information about what people had already had. We would then be able to make the calculation for the next year accordingly. However, I will write to the hon. Gentleman about that.
	I agree with the hon. Gentleman that it is vital that the correct advice is in place for people who want to plan for their futures and to take advantage of what will be an excellent source of support for them and their families as they enter the labour market or change jobs.

Howard Flight: rose—

Steve Webb: I thank the Minister, and give way to the hon. Member for Arundel and South Downs (Mr. Flight).

Howard Flight: I thank the hon. Gentleman for giving way. I simply remind him of the extensive debate on these matters in Committee. The central problem in moving to a system based on the current year rather than the previous year is how the Revenue can obtain the relevant information. That is not about income alone; it also involves the numbers of children involved, housing benefit details, and all sorts of other things. There is also the difficult problem of the number of hours worked.
	The administrative process is not up to speed at present, and the hon. Member for Northavon (Mr. Webb) is right to point out that that problem will continue beyond start-up. The Revenue will have a nightmare working out entitlements at year-end against awards paid in the course of the year, and in its attempts to collect overpayments. That is one of the problems with the Bill.

Steve Webb: Not all the items listed by the hon. Gentleman are especially complex. For example, the number of children involved should be fairly predictable, and housing benefit does not feed into this calculation—rather, it is the other way around. However, the practical problem with the number of hours worked may be the big one.
	My point about the amendments is that we are faced with 137 of them this evening. I sat through the Standing Committee debates and did not spot the problems that the amendments resolve. Will the Minister say something about how the problems came to light? The hon. Member for Arundel and South Downs implied that Lord Higgins spotted them, and brought them to the attention of the House. I am worried that the House allowed the Bill to go through without spotting the problems. By what mechanism were they brought to light, and are there any lessons about how that mechanism could be brought to bear earlier in the process? I am as embarrassed as anyone that we are having to discuss 137 amendments to a Bill that I waved through.
	We support the clarifications and technical corrections in the amendments that remain, but I hope that the Minister will comment on how we reached this point.

Dawn Primarolo: With the leave of the House, I shall respond to the points that have been raised.
	The Government consulted widely on the Bill, which is far better as a result. We continued to undertake consultation, and then moved these amendments. Lord Higgins's complaint was that we tabled them.

Howard Flight: The Government tabled them late.

Dawn Primarolo: No, we did not table them late. The lesson mentioned by the hon. Member for Northavon (Mr. Webb) involves Governments who want to ensure that legislation going through the House is subject to constant scrutiny. This is a complex Bill, but it would have operated without the changes suggested in the amendments. The Government are very grateful for the continued contribution made by the experts involved. They have made the Bill better as a result, but we had to decide whether to table the amendments.
	The other problem has to do with the point made by the hon. Member for Northavon—that the Bill has been eagerly anticipated by our constituents. Before the Government can put in place the apparatus for advice and support in connection with the Bill, and before we can publish the details about it, we need the House to agree it. I deeply regret that the amendments were tabled at such short notice in the other place. I should have preferred to avoid that, but they were purely technical in nature and everyone—including Lord Higgins and Lord Russell, who was extremely supportive and generous—agreed that the Bill would be improved by them. In the light of that, it would be a very poor House of Parliament—Commons or Lords—that stood on procedure and prevented the amendments from being agreed and improving the Bill.
	I accept that inconvenience was caused to the House of Lords, but the situation is not unique. The previous Conservative Government often tabled, at the last minute, matters of substance in the other place. These amendments do not change the substance of the Bill, but, as a result of the partnership in the consultation, they do make it better.
	Inland Revenue officials have worked tirelessly to ensure that all the information was available to Members of this House and the other place, and to those organisations outside the House that were actively helping us to design the Bill. I must even tell the hon. Member for Arundel and South Downs that the speaking note that he read out and attributed to Lord Higgins was, in fact, prepared for Baroness Hollis. When we accepted that the amendments had been tabled late, the Government provided the House of Lords with all notes and ministerial speaking notes. We also provided all the technical details, and full explanations of them. We offered their Lordships meetings with officials, and I would even have honoured the meetings that were, rather baldly, set up with me. However, I am glad that that did not turn out to be necessary.
	Amendments may improve a Bill, but it may be inconvenient for the House to deal with them. Ministers must decide the balance between those two factors. I decided that we should continue to improve the Bill as much as possible.
	I apologise to both Houses for any inconvenience caused, but I remind hon. Members that most of the amendments are consequential. Lord Russell was very generous in his comments, and even Lord Higgins said that the Bill was improved by them. His objections therefore perplexed me.

Steve Webb: My observation—it was not a criticism—was not that amendments were tabled late. If a problem is spotted, it should be corrected. However, why did not the mechanisms that allowed outside observers to spot the problems come into action earlier in the process? Legislation is under constant scrutiny after it has finished its passage through the House, but why did not the process of technical clarification happen earlier?

Mr. Deputy Speaker: Order. I appreciate that the Minister is responding to questions that have been raised, but we are not at present dealing with the amendments that are before the House. I hope that she will respond briefly to the hon. Member for Northavon (Mr. Webb), but then she really ought to turn to the amendments.

Dawn Primarolo: Indeed, Mr. Deputy Speaker. The hon. Gentleman answered his own question, which is that legislation is normally scrutinised in detail after it has been passed. The option is to take much longer and have draft legislation available for years in advance, to do it as the Government have attempted to do, or to do as people suggested and table amendments once the legislation is finalised. Points on most legislation are made afterwards, causing amendments to be tabled.
	I think that I have dealt with the point of the hon. Member for Arundel and South Downs about the amendment. If there were a criticism to be made of the Government—because it is the Government who found that changes needed to be made—it would be that they were trying to be too helpful. This may be a dangerous thing for a Minister to say, but long may the Government and their Ministers continue to be helpful in ensuring that legislation is improved.
	I am grateful to the hon. Members for Arundel and South Downs and for Northavon for the positive way in which they have commented on the amendments. I look forward to their continued involvement as we roll out the tax credits up to April 2003; they have touched on important issues that can be dealt with only when the legislation is finalised.
	Lords amendment agreed to.
	Lords amendments Nos. 3 to 6 agreed to.

Clause 7
	 — 
	Income Test

Lords amendment: No. 7.

Dawn Primarolo: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we may take Lords amendments Nos. 8, 24 to 31, 84, 98 and 100.

Dawn Primarolo: I will be as brief as I can on these amendments, which make technical and drafting improvements to the provision in clause 17 about the processing of the final entitlement at the end of the year. Before I explain the main changes made by the amendments, I should perhaps explain why the group begins at clause 7. That is simply because, as a result of the changes that I am about to describe, the terms "current year income" and "previous year income", currently defined only for the purposes of clause 7, will in future have an application elsewhere in part 1. For this reason, amendments Nos. 7 and 8 make the purpose of the Bill clear.
	Amendments Nos. 9 and 10 are short, technical amendments, intended to clarify the scope of the Treasury's regulation-making powers under subsections (6) and (7) of clause 7.

Mr. Deputy Speaker: Order. I think that the right hon. Lady has jumped ahead a little. Amendments Nos. 9 and 10 come in a later group.

Dawn Primarolo: rose—

Mr. Deputy Speaker: Order. There is no reason why we should not put the two groups together, if it makes life easier for the right hon. Lady and everybody else.

Dawn Primarolo: That is extremely generous of you, Mr. Deputy Speaker. I am not quite sure that it will make life easier, but I will start again.
	We are discussing amendments Nos. 9, 10, 11 and 17—

Mr. Deputy Speaker: Order. Can I help the right hon. Lady? We are debating Lords amendment No. 7—that is the principal amendment. In the same group are Lords amendments Nos. 8, 24 to 31, 84, 98 and 100. There is a subsequent group, that we have not yet come to, which consists of Lords amendments Nos. 9, 10, 11 and 17.

Dawn Primarolo: Thank you very much, Mr. Deputy Speaker. I now discover that I was correct before I changed direction. I am not sure what made me change direction, but I apologise, and will return to the amendments before the House.
	Let me resume by saying that this group of amendments deals specifically with finalising entitlement at the end of the year, dealt with under clause 17. However, the main changes made by this group of amendments start with clause 7. That is simply because, as a result of the changes, the terms "current year income" and "previous year income" which are defined only for the purposes of clause 1, will in future have an application elsewhere in part 1 of the Bill. For that reasons, amendments Nos. 7 and 8 make it clear that those terms are defined for the purposes of part 1. At the same time, amendments Nos. 98 and 100 add those terms to the list of terms as defined in clause 44, the interpretation clause.
	The most important changes are those to clause 17, which sets out the machinery for finalising the end-of-year awards. As discussed in previous deliberations, entitlement to tax credits will be based on annual income. This means that entitlement can finally be determined only after the end of the tax year, when all the relevant information is known. Clause 17 therefore requires that claimants be given an opportunity, after the end of the year, to provide details of their income and circumstances so that the Inland Revenue can finalise their entitlement.
	None of the changes in this group of amendments is intended to change the process and the way in which the Bill works. However, as originally drafted, clause 17 required the board to ask claimants to confirm details of their relevant income. The clarification of relevant income is important. Requiring claimants to report details of their relevant income at the end of the year would mean that to arrive at the correct figure to report to the Inland Revenue, they would have to carry out a comparison of their previous year income with their current year income, applying the threshold for rises in income where relevant. In addition, most claimants would also need to report their actual current year income to the Revenue at the same time, so that their award could be renewed.
	There is no need for the Bill to impose such a burden on claimants, nor was it intended to do so. The amendments clarify the correct explanation of relevant income and therefore the obligations that are placed to supply that information to the claimant are made clear in the Bill. Before the changes, the provisions could have been interpreted to mean that claimants were being asked to undertake all the calculations themselves, but that job is undertaken by the Revenue.
	Thank you very much for your assistance, Mr. Deputy Speaker. I hope that that is now clear.
	Lords amendment agreed to.
	Lords amendment No. 8 agreed to.
	Lords amendment: No. 9.

Dawn Primarolo: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we may discuss Lords amendments Nos. 10, 11 and 17.

Dawn Primarolo: This group of drafting amendments clarifies the scope of the powers to make regulations about income and about the child care element of the working tax credit. Clause 7 provides that entitlement to tax credits will depend on the income of the claimant or claimants. In particular, entitlement will be based on the income for a tax year. The amendments to clause 7 in this group are concerned with subsections (6), (7) and (8) and relate to the computation of income, the period in which income is taken into account, what counts as income, and when the Inland Revenue can treat a person as having income or not.
	Amendments Nos. 9 and 10 are short, technical amendments that are intended to clarify the scope of the Treasury's regulation-making powers under subsections (6) and (7) of clause 7. Those subsections allow regulations to be made about how income is to be allocated between particular tax years.
	We discussed that matter in the Standing Committee. I point out to the hon. Members for Northavon (Mr. Webb) and for Arundel and South Downs (Mr. Flight) that, through these changes, we are trying to make as clear as possible the question of relevant income and to ensure that the application of the regulations delivers that.
	All the amendments will improve the legislation and will clarify some of the meaning, but they do not change the operation of the Bill and I commend them to the House.
	Lords amendment agreed to.
	Lords amendments Nos. 10 to 12 agreed to.

Clause 8
	 — 
	Entitlement

Lords amendment: No. 13.

Dawn Primarolo: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we may discuss Lords amendments Nos. 14 to 16 and 101.

Dawn Primarolo: These amendments are all aimed at ensuring that we have the flexibility to ensure that, if appropriate, any family responsible for caring for a child or young person could have access to the appropriate level of support.
	I shall explain the Government's reasoning for introducing these amendments, as the matter did not detain us during the Committee stage, nor is it directly relevant at present, but given what might happen in the future, it is important to include in primary legislation the ability to respond to change. I shall thus set out in a little more detail why we believed it was appropriate to introduce the amendments.
	Clauses 8 and 9 provide the framework for entitlement to the child tax credit. The draft Child Tax Credit Regulations, which were made available on 9 May, provide the detailed provisions that will sit within that framework. Together, those measures create a system that ensures that the family with main responsibility for a child will be provided with a suitable level of support, depending on their needs. That is similar to many current systems of support for children, and we believe that—currently—it provides the most suitable means to ensure that we can focus support on raising children out of poverty.
	Our present aim is to enable one family to claim support for any particular child at any one time. That is the principle on which the Bill, the draft regulations and the business systems being developed are based. There are several sound reasons for that approach. Usually, the person or couple who have the main responsibility for care of a child bear more of the everyday responsibilities for the child, and meet the everyday expenditure for him or her. It is vital, especially for families on lower incomes, that enough support is directed to that family to lift the child from poverty, or to keep him or her out of poverty.
	However, we recognise that patterns of care may be changing. That is the reason for the amendments. Many more families share responsibility for children than was previously the case, especially where a family has split up—resulting in both parents sharing responsibility for the children from the former relationship. The increase in shared responsibilities between families raises the question of whether, in future, directing support to one family will continue to be the right approach. We are determined to keep the provision of Government support in such cases under review, in order to ensure that we meet the needs of the children involved.
	We have no intention, however, of making any hasty or ill-considered changes to our present approach. The question of shared responsibility for children goes wider than tax credits and affects other systems of support that recognise the needs of families with children such as housing benefit. Even if, in the light of the changing climate on this issue, we became persuaded that a change in approach was warranted, such a change could not be made overnight.
	The consultation exercise on the tax credits and our continuing contact with lobby groups have shown that payment of support to the family with the main responsibility for the child is seen as the most appropriate way to deal with the vast majority of families with children. If there were to be a change, it would have to be carefully thought about; there would need to be careful preparation of the ground with claimants and advisers. Any change would also entail extensive—and expensive—IT and business systems changes, which would require detailed analysis and take time to establish.
	We will continue to stand by our intention to direct payment to the family containing the person with the main responsibility for the child, and entitlement will not be divided in cases where more than one household is involved in care of a child.
	Against that background, we see the need to make some protective changes to the Bill to equip us to change the way we deal with shared care cases—if it became apparent that a different approach was more appropriate. To provide us with that flexibility, Lords amendment No. 14 would allow us to vary the amount of the individual element in the child tax credit to reflect any relevant factors, such as shared responsibility for a child. That mirrors a similar power already present in the family element.
	Lords amendment No. 15 would enable us, where more than one claim is received for a particular child or children, to pay each family a reduced amount of any element payable in respect of any particular child—to reflect the level of care that the family provides. If we decided, in the future, to recognise a claim for a child by more than one household at any one time, we would not want those households to be in a better position in terms of tax credits than a family who had stayed together throughout and were solely responsible for a child.
	Lords amendments Nos. 13, 16 and 101 allow us to define the phrase
	"being responsible for a child"
	separately for the purposes of the child tax credit and the working tax credit. However, the key factor in making the amendments is to make clear in the Bill that, if, in future, tax credits have to reflect shared care responsibility, entitlement can be divided and not duplicated.
	The new tax credits will provide an important source of financial support, especially for families on the lowest incomes. We recognise that it is important to be able to process claims as quickly as possible and get awards into payment. However, as with all forms of support, we have to reflect the complexities of real life; the rules may be complex. That is why we do not think it appropriate to rush into making changes.
	We are already aware that in many cases where a dispute arises over who is responsible for a child, its resolution can be time consuming and difficult. Those difficulties are unlikely to reduce if, in future, we recognise more than one claim. It will be necessary to undertake a great deal of detailed discussion and consultation about the practicalities of how we could deliver such a change. For example, we might wish to confine access to child credit to those who care for a child for at least three or four days a week, or, looking at the matter more broadly, for about 40 per cent. of the time on a regular basis. The powers that we have taken would enable such matters to be covered in secondary legislation, which can be fine tuned more readily if necessary, following detailed considerations and consultation.
	I hope that I have made it clear that the Government's intention is as was stated on Second Reading, in Committee and in the debates in another place, and that that is purely to provide for a secondary legislation route if at any time we need to take account of shared care.
	I have been careful to give a fuller explanation to the House on this issue because it had not been covered previously in debate in Committee or on the Floor. I hope that hon. Members recognise that it is necessary to have the power, although it does not mean that we will use it, because there is a long way to go in changing the system before such a power could be contemplated.
	Lords amendment agreed to.
	Lords amendments Nos. 14 to 31 agreed to [some with Special Entry].

Clause 17
	 — 
	Final decisions

Lords amendment: No. 32.
	Motion made, and Question proposed, That this House agrees with the Lords in the said amendment.—[Dawn Primarolo.]

Mr. Deputy Speaker: With this it will be convenient to deal with Lords amendments Nos. 35, 36, 41, 43, 44, 46, 48, 65, 67 to 71, 74, 79, 82, 83, 87, 89, 90, 92 and 94.

Steve Webb: I apologise if, by my earlier remark, I indicated that I would not speak on this group of amendments. Something that arose in debate prompted me to make a brief comment. Lords amendment No. 36 would insert a new clause, subsection (5) of which refers to the revision of decisions. It arises from our earlier discussion about the revision of decisions where a person is being made an award on the basis of an out-of-date P60 and then, within a year, they get a revised decision. I have one question for the Minister, which I hope to put briefly and simply.
	The new system is starting in eight or nine months' time and everyone will be starting afresh on it. Let us assume that, very roughly speaking, the income of three quarters of the population goes up from one year to the next, as a result of inflation and so on, and the income of the remaining quarter goes down—in reality, most people's income goes up. In terms of revising decisions, is it correct that the three quarters of people who, for the sake of argument, will be assessed in March 2003 on the basis of their 2001–02 P60, will be overpaid and then, a few months into the financial year, will have to have that award revised downwards in light of their 2002–03 P60?
	Will it be the case that, three months into the system, three quarters of all tax credit claimants will have their awards revised downwards? What effect will that have on public perceptions of the system? Will everyone face revisions, will most of them be downwards and will that undermine the system?

Dawn Primarolo: The hon. Gentleman is asking a question on quite a technical point. My understanding is that the answers to his questions are basically no, no and no, but I shall read what he said in the Official Report. This comes back to the way that calculations of what has already been received are taken into account when deciding future entitlement. The ability to revise is exactly that—for instance, where an application may be moving from previous year to in-year—so it does not imply what the hon. Gentleman said; quite the contrary.
	Lords amendment agreed to.
	Lords amendments Nos. 33 to 137 agreed to [some with Special Entry].

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Immigration

That the draft Immigration (Entry Otherwise than by Sea or Air) Order 2002, which was laid before this House on 17th June, be approved.—[Derek Twigg.]
	Question agreed to.

BRIGHTLINGSEA SHIPYARD

Motion made, and Question proposed, That this House do now adjourn.—[Derek Twigg.]

Bernard Jenkin: I am privileged, and indeed extremely grateful, to have been granted the opportunity to raise the subject of this Adjournment debate—the development of the James and Stone shipyard, Brightlingsea. I should explain that the shipyard is quite a large site on the waterfront of a small Essex fishing town on the Brightlingsea creek, which is part of the River Colne estuary in my constituency. The site has been derelict for a number of years: it certainly requires development, and no one would oppose the principle of development. What is wanted, however, is development that is sympathetic in character to the town and in scale with the existing buildings of the town; that is the nub of the case that I wish to present to the House and the Minister this evening.
	I have set out all the salient matters in correspondence both with the Deputy Prime Minister, who now has responsibility for planning matters, and with his predecessor, the then Secretary of State for Transport, Local Government and the Regions, the right hon. Member for Tyneside, North (Mr. Byers). I very much hope that having read those and other representations the Minister will see fit to call for a full public inquiry into that planning application, which is in effect trapped in outdated thinking, and I shall set out the reasons why. The result would involve plonking a very large and inappropriate development into that very sensitive site in an historic fishing town, which would be to the detriment of the community.
	Before I set out the key points, I should add that the situation has had a long gestation. For many years, I have been seeking to engage the developers in more constructive conversation and the local authority in putting more severe pressure on the developers to produce more practical and sensible proposals and to engage the townspeople more actively in the process. In the end, I got the false impression that the scheme would be accepted. It was only when I finally launched a campaign to hold a public inquiry that I was absolutely overwhelmed by the strength of representation against the development and in favour of a public inquiry.
	I have circulated a questionnaire, and the response has been huge. There have been no more than a couple of dozen returns against. It is overwhelmingly in favour of a public inquiry. I hope shortly to submit a petition to the House that will carry a substantial number of signatures, certainly representing a substantial minority of those on the voting register in Brightlingsea, if not a majority of those who live in the town. I have the support of the town council in making these representations. So let there be no doubt that there is overwhelming public support for the position that I have adopted, and that the townspeople have moved from sullen acceptance of what they thought was inevitable to the hope that Ministers might be able to do something to rescue the situation.
	I also wish to place on record the fact that I do not believe that the local authority is to blame for this situation, because planning policies have developed very dramatically in the past 10 years. We started with an out-of-date concept of what the development should be. Outline planning permission was given some 10 years ago for a very much larger development than modern planning guidance would suggest is reasonable. That is shown in a curious conflict: the current local plan, which is nearing its renewal date, suggests not more than 100 residential units for the site, but the outline planning permission already allows for 150 units. If one looks at the design brief, which is also much more recent than the outline planning permission, it becomes apparent how the difficulties have arisen.
	The local authority has been trapped in a conundrum involving a succession of events, and it is pre-committed to proposals that would not be acceptable if they were begun from scratch now. Indeed, they are completely out of line with the much more enlightened planning policies on modern and sensitive design. Some of those policies were introduced by the previous Government, but I fully admit that others have been introduced by the present Government.
	As I say, the planning authority is preparing to grant approval in principle based on conforming with the outdated design brief, which gives a range of 100 to 150 units, although the local plan gives only 100 units. The authority appears beholden to the numbers in the design brief, which is 14 years old, antiquated and quite inappropriate for today's standards. An impracticable and unsustainable development is proposed. The new design brief, based on modern thinking and reflecting Brightlingsea today, would specify a much more limited and sympathetic development.
	The design brief is inherently flawed: it is impossible to see how 150 units could ever be delivered, given the other requirements of the brief, according to which the development should
	"be sympathetic to its position within the Brightlingsea Conservation Area in terms of style, diversity and scale"
	and
	"maintain and enhance the sense of place at The Hard".
	I should emphasise that the Hard is social centre of activity on Brightlingsea waterfront, where people sail small craft and a few yachts—all very much locally based waterfront entertainment.

Bob Russell: There are lots of beach huts.

Bernard Jenkin: The hon. Gentleman may be a regular visitor to those beach huts, and I am grateful to him for his support today.
	The design brief goes on to say that the buildings should be
	"set back into the site"
	and of
	"domestic and vernacular scale . . . in sympathy with the neighbourhood".
	There is absolutely no doubt that the proposed buildings are not set back or built in vernacular style, as a layman would understand it. I am not allowed to show the plans on the Floor of the House, so I have to describe them.
	There is a problem with any waterside development in a place like Essex in that all the new housing has to be built above a certain datum that is significantly above the maximum high-water mark of the tide to prevent flooding. Moreover, the properties would be built out of piers that are thrust into the creek. Admittedly, many of those piers already exist, but they would have to be raised very substantially to meet the requirement to be beyond flooding level.
	The development would not only be very much higher than the existing buildings on the surrounding land, but would thrust deep into the creek, blocking views, completely dominating the waterfront and completely changing the character of Brightlingsea. It would be detrimental to the amenity that the waterfront provides. Nowhere does the design brief make it obvious that the development would stick into the creek to such an extent and to such a height.
	The current application, if granted, would result in a large, dominant high-density development, which would be out of character with the small scale of the coastal location. It would be a London Thames-side development in character, but it would be imposed on a small Essex creek.
	The proposal exploits the brief to justify a major addition to the site, which would protrude well out from the foreshore. Some 80 units would be on the foreshore, where there are currently no permanent buildings. That would be to the detriment of the harbour, its users and visitors. The harbour is a vibrant summer sailing centre and small commercial port, with national and international regattas and regional events. Some 38,000 visitors are afloat each year, apart from local residents.
	Much training and launching from the adjacent historic Hard and sailing club slipway are at risk because of the proposal's wind effects and the Hard is at risk of silting. It may well be that those technical matters can be addressed, but they underline how big the development's likely impact would be. Although the development would not intrude inside the harbour boundary, it would be right against the narrow fairway, where people launch and haul out their boats and where ships manoeuvre at high tide.
	As I have already said, the views are unique to the town. They are the superb, unspoilt coastal Essex views across the Colne estuary to Mersea island and over to the Blackwater estuary. Those views are important in attracting 188,000 tourist and leisure visitors to the town each year, and the numbers are growing. The views will be largely blocked by the development on the foreshore. Some 90 local jobs are sustained by tourism and leisure.
	I have written to the Deputy Prime Minister about the environmental concerns which have been raised by English Nature. The conundrum at the heart of the proposal is that it is intended that the environmental concerns should be addressed by closing the marina, which will be enclosed by the large piers, for a proportion of the year. Practically speaking, what is likely to happen is that once the marina is built, and people have their boats there, they will want to take them out at times different from the season. Of course, they will want to keep testing—reapplying for—the planning permission to open up the marina for different times of year. I guarantee that it is only a matter of time before the condition placed on the development is ignored or set aside, as it will come to be seen as completely unreasonable. Whether or not it is the right place for a major marina—there is certainly scope for mooring of boats and a small-scale marina—it is wrong that environmental concerns should be addressed in this temporary and unsatisfactory way.
	As a final aside, there are serious traffic concerns about a major development at Brightlingsea. Only one access road into the town exists, the B1029, which is an accident-prone access road that ends at a tangle of narrow streets and blind bends by the site. The local plan notes that traffic and parking are key issues, and the town council is particularly concerned that those have not been sufficiently addressed. The highways authority avoided its responsibility, however, by making no comment whatever on the application. That reflects a general neglect of Brightlingsea.
	Brightlingsea is a town right on the edge of Essex—people never go there unless they are going there. Not many people really know Brightlingsea. I know Brightlingsea. It is one of the favourite corners of my constituency, an historic Cinque port, which gives a sense of the history of the place. Part of the development of the site includes what is known as "The Old Wreck House". The people of Brightlingsea are a very stable population with a tremendous community spirit, and they feel that their wonderful town is very precious. The development represents a very serious threat.
	A viable, sustainable, medium-density low-rise scheme is possible on the dry land without the considerable expense of constructing major new and much higher protrusions from the shore haul. That would meet all the environmental and statutory requirements and be to scale and in character with the location. Such an alternative concept—one has been drawn up by a local architect—could sustain perhaps 50 to 60 units with a variety of community uses, such as retail and so on.
	The current application has very little to commend it. I am disappointed that the developers have made so little effort to engage constructively with me to come up with a more viable proposal. Against the background of an outdated design brief, only a full public inquiry can unblock all the issues that have been raised, take a seriously objective view, set aside the history and decide in favour of what the vast majority of the people of Brightlingsea seem to want—a recommendation for a much smaller and more sympathetic development.

Tony McNulty: I begin by congratulating the hon. Member for North Essex (Mr. Jenkin) on securing this debate. As it happens, I know Brightlingsea. The parents of very good friends of mine had a hostelry down in Brightlingsea. Although I confess that I have never been to the beach huts there, Brightlingsea was at that time blessed with several hostelries that were all rather close to each other. That made for inviting tours, popping in and out of each one. I did that many years ago, so I am familiar with the location and the description given by the hon. Gentleman.
	The hon. Gentleman's interest in the proposed redevelopment of the James and Stone shipyard site comes as no surprise because, as he said, he made the Government Office for the East of England aware of his concerns about this matter back in February. I am also aware that he subsequently wrote on 30 April to the then Secretary of State for Transport, Local Government and the Regions, my right hon. Friend the Member for Tyneside, North (Mr. Byers), setting out his concerns in more detail and requesting that the planning application be called in for my right hon. Friend's determination. Tendring district council was formally directed on 14 June, under article 14 of the Town and Country Planning (General Development Procedure) Order 1995, not to grant planning permission until we have had the opportunity to decide whether call-in would be appropriate.
	Before I proceed, it might be as well to remind the hon. Gentleman that our general approach is not to interfere with the jurisdiction of local planning authorities unless it is necessary to do so. Parliament has entrusted them with responsibility for day-to-day planning control in their areas, and it is right that they should normally be free to carry out those duties. There will be occasions, however, when we may consider it necessary to call in a planning application for determination by my right hon. Friend the Deputy Prime Minister instead of leaving the decision to the local planning authority. Our policy is to be very selective about using that power and, in general, we will take that step only if planning issues of more than local importance are involved. We have given as examples of cases that might be called in: those which may conflict with national policies on important matters; those which could have significant effects beyond their immediate locality; those which give rise to substantial regional or national controversy; and those which may involve the interests of national security or of foreign Governments. I am not saying that the shipyard falls into the latter category.
	In addition, potential candidates for call-in are those applications that raise significant architectural and urban design issues. I am sure that the hon. Gentleman will appreciate that our consideration of this case has only just begun, and that it will be a while yet before we will be in a position to reach a view as to whether call-in would be appropriate.

Bernard Jenkin: I had not thought of raising the issue of national security, and I shall refrain from doing so. I submit that I make this plea on the grounds of architectural and urban design. I ask merely that the Minister refers to some of the very enlightened spatial development policies that the Government have introduced in recent years and that the Deputy Prime Minister has championed. The Minister will see that this development falls far short of what we expect in modern planning guidance. I hope that he will consider it in those terms.

Tony McNulty: If the hon. Gentleman bears with me, I will touch on many of those policies and policy documents to which he refers.
	As I was saying, I can give no undertaking at this stage about a call-in, and neither would the hon. Gentleman expect it, given my position. I can assure him, however, that the case will be looked at on its individual merits, and that very careful consideration will be given to the arguments for intervention that he has made today and in writing. I should make the point that in reaching our decision on call-in, we will look solely at the issues raised by the proposed development and not at its planning merits. It is not for us to judge whether planning permission should be granted, but only to decide whether that decision should be taken by my right hon. Friend the Deputy Prime Minister rather than Tendring district council, which is, essentially, the call-in process.
	The hon. Gentleman underlines the importance of design in new development, and the Government are committed to encouraging good design. It is central to creating high-quality, sustainable places wherever new developments take place. It is central to delivering the vision set out in the urban White Paper, and is integral to the rural White Paper. Urban design is the art of making places for people. It is not just about making places visually attractive, important as that is, but is crucial to how places function, to maintaining and enhancing the vitality and viability of villages, towns and cities, to regenerating rundown areas, and to creating safer communities where people feel secure.
	The planning system is a key means of delivering good design. Planning policy guidance note 1, "General Policy and Principles", sets out what is embraced by design and looks to all developments to uphold the principle of good design. It is policy to encourage good design and reject poor designs. That is underlined in more recent PPGs, and in particular in PPG 3 on housing. We expect local planning authorities to promote developments that bring together environmental, transport and planning best practice to create places with their own distinct identity and yet which are sympathetic to the local built environment. New development should help make places that are safe, attractive and of a quality that will endure. It should also be in sympathy with the character and setting of its surroundings.
	Policy on design is supported by a number of good practice guides, and the hon. Gentleman alluded to some of them. "By Design", the companion guide to PPG 1, sets out the key principles of good urban design, how they might be applied and how to incorporate them into the planning and development process from the pre-application stage right through to the planning decision. "By Design" makes it clear that, as a matter of good practice, the fundamental design principles of a scheme should not be relegated for later consideration. They must be acceptable at the time that planning permission for the development is granted. "Better Places to Live", the companion guide to PPG 3, sets out the design principles and good practice that can secure quality in the design and layout of new residential environments, and it is equally important. "Places, Streets and Movement" emphasises the importance of designing new housing developments with people, and not just traffic, in mind.
	Local planning authorities may have produced their own design guidance to aid applicants to bring forward development proposals, but they are expected to have regard to the more recent advice on design published by the Department and to ensure that this advice is reflected in any future revision of local design guidance that might be necessary.
	In this case, the hon. Gentleman will be aware that an extant outline consent for development of the site to provide a mix of residential, leisure, marina and ancillary uses was also granted in 1994, with all matters reserved for subsequent approval. That permission was renewed in 1997, and I understand that an application for further renewal is also before the district council, although the article 14 direction, which I mentioned earlier and which has been served on the council, prevents it from determining that renewal application.
	Local planning authorities are able to grant outline planning permission and reserve decisions on certain details until a later stage. Applications for approval of reserved matters—siting, design, external appearance, means of access and the landscaping of the site—effectively convert an outline into a full permission and must be approved before work can commence. Although design is a separate reserved matter, as is external appearance, it is important for local planning authorities to remember that urban design goes much wider than simply aesthetics. Siting, means of access and landscaping of the site all impact on the overall urban design.
	My right hon. Friend the Deputy Prime Minister is able to call in an application for approval of reserved matters, but I must emphasise that intervention at the reserved matter stage is likely only in wholly exceptional cases. It must relate solely to the reserved matters and cannot look to reopen issues concluded by the granting of the outline planning permission.

Bernard Jenkin: Given that the previous planning permission is up for renewal and that, if there were a public inquiry, it would consider the renewal of that planning permission, am I wrong to assume that, within the purview of that inquiry, it could conclude that the number of dwellings in previous planning permissions granted has been excessive?

Tony McNulty: With the best will in the world and given that I have had this role for only four weeks, I shall certainly not speculate on the outcome of public inquiries that may or may not happen in the immediate future. I am not entirely sure whether the article 14 direction, which would prevent a determination of the renewal, would lump the application for renewal in with the initial application that is before my right hon. Friend the Deputy Prime Minister. I shall write to the hon. Gentleman on that, because I am not entirely sure of the answer and it would be wrong of me to suggest that I am. I shall not be going into the other elephant trap that has been set because I have been in this post for only four weeks.
	Once again, I congratulate the hon. Gentleman on securing this debate on what is clearly an important issue in his constituency. At present, however, we are concentrating on examining the case for calling in the latest full application. His points, together with those made in the petition when it is presented, will—if they raise material planning matters—be taken into account together with all other material planning matters.
	As I said, I have a personal knowledge of Brightlingsea; I like the town. I have not been there for ages but, given the comments about beach huts, I may be tempted to visit them as well as the hostelries.
	Question put and agreed to.
	Adjourned accordingly at twenty-six minutes to Eight o'clock.